P, called the present worth or present value hence the symbol p, is invested at an interest rate, i, for a time period, t, the investment. Present worth method of comparisonengineering economics. In the real world, the majority of engineering economic. Present worth analysispresent worth analysis egn 3203 engineering economics lo3 a. The capitalized cost for the two annual maintenance cost series may be determined in either of two ways. Egr2302engineering economics al akhawayn university 62. Book july 2017 with 28,901 reads how we measure reads a read is counted each time someone views a publication. It provides the managers not only a sound basis but also a clearcut approach to. Economics is the study of how people and society choose to employ scarce resources that could have alternative uses in order to produce various commodities and to distribute them for consumption, now or in the future, from paul samuelson and william.
In present worth method of comparison, the cash flows of each alternative will be reduced to time zero by assuming an interest rate i. Present worth of aftertax depreciation recovery, % e. Panneerselvam designed as a text book for undergraduate students in various engineering disciplines mechanical, civil and industrial engineering and for postgraduate students in industrial engineering and water resource management, this comprehensive and wellorganized book shows how complex economic decisions can be made from a number of. For our sample cfd the expected rate of return cost of capital is 10% the present value of c 0. Engineering economics 42a1 discount factors and equivalence present worth p. Engineering economy lecturessolved examples and problems introduction. Panneerselvam designed as a text book for undergraduate students in various engineering disciplines mechanical, civil and industrial engineering and for postgraduate students in industrial engineering and water resource management, this comprehensive and wellorganized book shows how complex economic decisions can be made from a number of given alternatives. The present value of a future cash flow of 7 in period 10 with discount rate 5% i 0. Present worth is the value found by discounting future cash flows to the present or base time. Present worth analysis session 1214 dr abdelaziz berrado.
Determine the present value of future money receipts or. Mg6863 engineering economics unit 3 cash flow unit sri vidya. Alternatives include estimates of costs cash outflows and revenues cash inflows two types of cash flow estimates. This lecture is part of lecture series for engineering economics course at m.
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