Lecture 6 (Engineering Economics) PDF

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Engineering Economics...

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Time Periods and Applications Analysis Period - The analysis period is an important part of setting up a Present Worth Analysis - Salvage Value is how much you can get back from a product after its useful life is done - EX: PW = 1500 - 200(P/F, 7%, 5) = 1500 - 200(0.7130) = 1357 PW = 1600 - 325 (P/F, 7%, 5) = 1600 - 325 (0.7130) = 1368 - If one or more alternatives have useful lives different from the analysis period, we need to find a consistent period over which to compare - Often varying analysis periods have to do with labor estimates - Some projects are measured over an infinite time period - Roads - If it wears out it will be replaced - An infinite analysis period is analyzed using the principle of capitalized cost -...