Friday, July 15, 2011

Cmparison of alternative using capitalized worth method (CW method):

Capitalized worth (CW) is the present worth of all receipts or
expenses over an infinite length of time. This method of
comparison is called CW method. If only expenses are Considered
we called it capitalized cost method. This method is used for
comparing mutually exclusive alternatives when period of service
needed is indefinitely large or common multiple of lives is very
long , and repeatability assumption is applicable.
CW of a perpetual series of end of period uniform
payment A with interest at i% per period is A(P/A,i%,∞ )
Capitalized worth of A,
P = A(P/A,i%, ∞ )

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