ECO 1192 Lecture Notes - Lecture 3: Airborne Early Warning And Control, Mansfield
2 Oct 2017
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The result of converting all project cash flows to an equivalent indicator or measure. Simple - number of time periods required to recover a project"s first cost (marr = Discounted - same but with marr is not 0% Independent - projects are selected or excluded without consideration for other projects. Mutually exclusive - only one valid option can be selected. Cash inflows and outflows are summarised in an equivalent single dollar amount at a specific point in time. Select all projects with a non-negative pw or fw. If all projects have negative pw and fw, select the status quo. Select the project with the largest, non-negative single sum. If all projects have a negative single sum, select the status quo. Use their respective duration to determine if they are valid. Period of analysis is usually the least common denominator of the project durations. Transforms all project cash flows over a period of time to an annuity.
