ENGINEER 2B03 Study Guide - Final Guide: Mansfield, Cash Flow, Capital Market

• School: McMaster University
• Department: Engineering (General)
• Course: ENGINEER 2B03
• Professor: N A

Document Summary

For investment alternatives, the pw of all cashflows must be positive at the marr to be attractive: select the alternative with the largest. For cost alternatives, the pw of all cash flows will be negative: select the alternative with the least negative pw! Mutually exclusive alternatives (mea) selection of one alternative that excludes the choice of any other one. A stud(cid:455) period is a ti(cid:373)e o(cid:448)er (cid:449)hich mea"s are compared: must consider shorter lived or longer lived alternative, company policy, how long the asset will be useful for. Meas can have equal lives, or they can have unequal lives where at least one mea does not match the study period. The study period either goes on forever of is equal to a common multiple of the lives of the meas. The economics consequences e(cid:454)pected duri(cid:374)g the mea"s lifespan will also happen in future lifespans: coterminated assumption : use finite and identical study periods for all meas.