18. Alternatives Analysis

Question 1

How do you solve benefit/cost ratio problems?

Answer 1

Convert benefit and cost to annuities and compare.

Question 2

How do you solve break-even analysis?

Answer 2

Create equation based on “x” number of units and use Equivalent Uniform Annual Cost/Benefits.

Question 3

When to use Present Worth or Equivalent Uniform Annual Costs (EUAC)?

Answer 3

• PW: if alternative have same life spans

- EUAC: if alternative have unequal life spans