IE 3201 Chapter : Fund Eng Econ Ch10
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,10%, 6) 0. 1(5, 000) 3, 300 (a) project cash flows based on most-likely estimates: 10. 3) (a) project"s irr if the investment is made now: , ,5) 0 (b) let x denote the revised annual cash flow: The optimal building height is 5 floors. n. 20 (b) effects of overestimation on resale value: 10. 5) (a) with infinite planning horizon: we assume that both machines will be available with the same cost in the future. Since we are comparing two mutually exclusive alternatives with unequal service lives, we could use aec instead of pw. With the annual o&m cost of ,309, the aec of the both model would be the same. If we use the pw as a base to compare, we need to assume a least common multiple of 40 years. 6 (c) with a shorter service life, model a is preferred over model b.
