3Advanced Economic Analysis of Alternatives
3.1 INTRODUCTION
This chapter is broken into three distinct elements. The first section summarizes the “three worths.” When making capital decisions, one can use net present worth (NPW) or net present value (NPV),1 NFW or net future value (NFV), and/or annual equivalent worth (AEW) or annual equivalent value (AEV) to make choices among alternatives. These are the three main analysis results applied to detailed cash flows over time using after-tax analysis. In the second section, the importance of rate of return, breakeven time, and meaningful sensitivity analysis to conducting sound analysis and data interpretation is discussed. The third section involves using the effects ...
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