Engineering Economics. By Muhammad Shahid Iqbal. Module No. 08 Present Worth Method of Comparison. Introduction. In this method of comparison, the cash flows of each alterative will be reduced to time zero by assuming an interest rate i.
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Engineering
Economics
By Muhammad Shahid Iqbal
Module No. 08
Present Worth Method of Comparison
PW = - P + R1[1/(1 +i)1] + R2[1/(1 +i)2] + ………….…+ Rn[1/(1 +i)n] + S [1/(1 +i)n]
P = Initial investment
Rn = Net revenue at the end of nth year.
S = Salvage value at the end of nth year.
PW = P + C1[1/(1 +i)1] + C2[1/(1 +i)2] + …….…+ Cn[1/(1 +i)n] - S [1/(1 +i)n]
P = Initial investment
Cn = cost of operation at the end of nth year.
S = Salvage value at the end of nth year.
Practice Questions
Practice Questions
Practice Questions
Practice Questions
Practice Questions