Mutually exclusive- one of several alternatives will ful ll the same need, so the selection of one alternatives implies other will be excluded. Service project - doesn"t affect rms revenue, so it just affects the costs. Revenue project - revenues depend on the choice of the alternative. Choose the project with the highest pw/fw/ae ( assuming they are positive ) Analysis period - time span over which economic effects are to be evaluated: must make a fair comparison between projects. Must have equivalent time span: equal lives gives straight comparison of pw/fw/ae, project lives shorter than analysis period ( replacement projects needed ) Can assume replacement project will be the same as initial project. Can use alternative technology later in the analysis period. Could lease/subcontract later in the analysis period. Use the best information that you can. Incremental analysis: flaws in ranking projects by irr, calculate return on incremental cash ows.