Engineering Economy Module 6

Module 6
COMPARISON OF
ALTERNATIVES
Engr. Gerard Ang

School of EECE
Definition of Terms
1. Comparison of Alternatives – deals with situations in which one
has more than one choice and using engineering economic
principles, one needs to decide between the alternatives so as to go
with the one that is most economically justified.
2. Methods used in the Selection of Alternatives

 Present Worth Method
 Annual Cost/Worth Method
 Equivalent Uniform Annual Cost (EUAC) Method
 Rate of Return (ROR) Method
 Payback (Payout) Period Method
 Capitalized Cost
 Benefit/Cost Ratio Analysis
Present Worth Method
This method involves finding the equivalent value of each
alternative at the present time, identified as time 0. If only
costs are involved, we can select the alternative with the
smallest present worth of costs. If cost and revenues are
involved, we select the alternative with the greatest present
worth on net revenues.
To perform present worth or annual worth analysis, an
interest rate and a study period must be specified. The
interest rate is usually the minimum acceptable rate of return
(MARR) of the organization.
Present worth analysis can only be used when the
alternatives have the same lives. If the alternatives have
different lives, some mechanism must be used to compare
them over the common study period.
Total Present Worth = P1 + P2 + P3
Where: P1 = initial investment
P2 = present worth of annuity of annual cost
P3 = present worth of some receipts
−𝐧
𝟏 −(𝟏+𝐢)−𝐧
𝐏𝟐𝟐= 𝐀
[ 𝐢 ] −𝐧
𝐏𝟑𝟑= 𝐅(𝟏+𝐢)−𝐧

Sample Problems on
1. Motors from two different manufacturers are being
considered for application. Both motors are 50 HP, 460
volts, 3-phase, 60 Hz, but motor A operates at 80%
efficiency whereas motor B operates at 88% efficiency.
The expected used for motors are 20 years. Motor A
costs Php600,000 and motor B costs Php750,000.
Electrical energy cost Php3.00 per kW-hr and the motors
will be operated at 8 hours per day, 250 days per year.
Assume taxes are 5% and rate of interest is 10%. Which
motor is purchased? Also, life of both motors is 15
years.
Sample Problems on
1. Motors from two different manufacturers are being considered for application. Both
motors are 50 HP, 460 volts, 3-phase, 60 Hz, but motor A operates at 80%
efficiency whereas motor B operates at 88% efficiency. The expected used for motors
are 20 years. Motor A costs Php600,000 and motor B costs Php750,000. Electrical
energy cost Php3.00 per kW-hr and the motors will be operated at 8 hours per day, 250
days per year. Assume taxes are 5% and rate of interest is 10%. Which motor is
purchased? Also, life of both motors is 15 years.
Factor Considered Motor A Motor B

Initial Investment (P1) 600,000.00 750,000.00
Annual Expenses
Energy Expenses 279,750.00 254,318.18
Taxes 30,000.00 37,500.00
Total Annual Expenses 309,750.00 291,818.18
P2 = 2,355,983.13 2,219,592.29
P3 = 0.00 0.00
Total Present Worth 2,955,983.13 2,969,592.29
Since PW of motor A < PW of motor B, select motor A
Sample Problems on
2. Perform a present worth analysis of equal service
machines with the costs shown below, if the MARR is
10% per year. Revenues for all three alternatives are
expected to be the same.
Electric Gas Solar

Powered Powered Powered
First Cost, $ 2,500 3,500 6,000
Annual Operating 900 700 50
Cost, $
Salvage Value, $ 200 350 100
Life, years 5 5 5
Sample Problems on
2. Perform a present worth analysis of equal service machines with the costs shown
below, if the MARR is 10% per year. Revenues for all three alternatives are
Electric Powered Gas Powered Solar Powered
First Cost, $ 2,500 3,500 6,000
Annual Operating Cost, $ 900 700 50
Life, years 5 5 5
Electric Gas Solar

P1 2,500.00 3,500.00 6,000.00
P2 3,411.71 2,653.55 189.54
P3 124.18 217.32 62.09
Total 5,787.52 5,936.23 6,127.45
select electric powered because it has the smallest
present worth among the three alternatives
Sample Problems on
3. A project engineer with EnvironCare is assigned to start up a new
office in a city where a 6 year contract has been finalized to take
and analyze ozone-level readings. Two lease options are available,
each with a first cost annual lease cost, and deposit- return estimates
shown below. Rate of interest is 15%.
Location A Location B
First Cost, $ 15,000 18,000
Annual Lease Cost, $ 3,500 3,100
Deposit Return, $ 1,000 2,000
Lease Term, years 6 9
Sample Problems on
3. A project engineer with EnvironCare is assigned to start up a new office in a city where a
6 year contract has been finalized to take and analyze ozone-level readings. Two lease
options are available, each with a first cost annual lease cost, and deposit-return
estimates shown below. Rate of interest is 15%.
First Cost, $ 15,000 18,000
P1 15,000.00 18,000.00
P2 21,447.88 18,996.69
P3 700.04 730.14
P4 9,288.52 5,116.72
Total 45,036.36 41,383.28
Select location B
Annual Cost (Worth) Method
The annual worth method involves finding the equivalent
end-of-period value of each alternative. The periods are
usually in years. If only costs are involved, we can select
the alternative with the smallest equivalent uniform
annual cost (EUAC) or net annual cost (NAC). If costs
and revenues are involved, we can select the alternative
with the greatest equivalent uniform annual benefit, or
net annual worth (NAW).
If two alternatives have the same annual worth, then
the one with the greatest investment is preferred. The
extra investment makes exactly the required MARR.
Annual Cost (Worth) Method
Problems that can be solved by the present worth method can also
be solved by the annual worth method. An annual worth analysis is
sometimes preferred over a present worth analysis because people
think better in terms of annual amounts than an equivalent amount to
time zero. Both methods yield the same results.
Annual worth analysis is the easiest method when the alternatives
have different lives. No specific study period need be specified, but the
implicit assumption that the alternative are compared over the least
common multiple of the lives.
Total Annual Worth = A1 + A2

Where: A1 = annual cost/income
A2 = annuity equivalent of the investment (depreciation)
𝐢

𝐀 =(𝐕 −𝐕 𝐬𝐬)
𝟐𝟐=(𝐕
[
(𝟏+𝐢 )𝐧𝐧 −𝟏 ]
Sample Problems on
Annual Worth Method
years.
Sample Problems on
Annual Worth Method
Factor Considered Motor A Motor B

Annual Expenses
Energy Consumption 279,750.00 254,318.18
Taxes 30,000.00 37,500.00
Interest on Capital 60,000.00 75,000.00
Total (A1) 369,750.00 366,818.18
Annual Depreciation (A2) 18,884.27 23,605.33
Total Annual Worth 388,634.27 390,423.51
Since AW of motor A < AW of motor B, select A
Sample Problems on
Annual Worth Method
2. Perform an annual worth analysis of equal service
Electric Gas Solar

First Cost, $ 2,500 3,500 6,000
Cost, $
Life, years 5 5 5
Sample Problems on
Annual Worth Method
First Cost, $ 2,500 3,500 6,000
Life, years 5 5 5
Electric Gas Solar

Annual Expenses
AOC 900.00 700.00 50.00
Interest on Capital 250.00 350.00 600.00
Total Annual Expenses (A1) 1,150.00 1,050.00 650.00
Annual Depreciation (A2) 376.73 515.96 966.41
Total Annual Worth 1,526.73 1,565.96 1,616.41
Select electric since it has the smallest AW among the three
Sample Problems on
Annual Worth Method
3. A project engineer with EnvironCare is assigned to start
up a new office in a city where a 6 year contract has
been finalized to take and analyze ozone-level readings.
Two lease options are available, each with a first cost
annual lease cost, and deposit-return estimates shown
below. Rate of interest is 15%.
First Cost, $ 15,000 18,000
Sample Problems on
Annual Worth Method
First Cost, $ 15,000 18,000
Annual Expenses
Lease Cost 3,500.00 3,100.00
Interest on Capital 2,250.00 2,700.00
Total Expenses (A1) 5,750.00 5,800.00
Total Annual Worth 7,463.55 6,872.33
Select location B
Equivalent Uniform
Annual Cost (EUAC) Method
In this method, all cash flow (irregular or uniform)
must be converted to an equivalent uniform annual
cost, that is, a year-end amount which is the same
each year. The alternative with the least EUAC is
preferred. When the EUAC method is used, the
EUAC of the alternatives must be calculated for one
life cycle only. This method is flexible and can be
used for any type of alternative selection problems.
The method is a modification of the annual cost
method.
Sample Problems on
Equiv. Uniform Annual Cost Method
years.
Sample Problems on
Motor A Motor B
Annual Equiv Equal Amt 78,884.27 98,605.33
Annual Expenses
Taxes 30,000.00 37,500.00
Total EUAC 388,634.27 390,423.51
Since EUAC of motor A < EUAC of motor B, select motor A
Sample Problems on
2. Perform an equivalent uniform annual cost analysis of
equal service machines with the costs shown below, if the
MARR is 10% per year. Revenues for all three alternatives
are expected to be the same.
Electric Gas Solar

First Cost, $ 2,500 3,500 6,000
Cost, $
Life, years 5 5 5
Sample Problems on

First Cost, $ 2,500 3,500 6,000
Life, years 5 5 5
Electric Gas Solar

Annual Equiv Equal Amt 659.49 923.29 1,582.78
Annual Expenses
AOC 900.00 700.00 50.00
Total EUAC 1,559.49 1,623.29 1,632.78
Select Electric
Sample Problems on
First Cost, $ 15,000 18,000
Sample Problems on
First Cost, $ 15,000 18,000
Annual Equiv Annual Amt 3,963.55 3,772.33
Total EUAC 7,463.55 6,872.33
Select location B
Rate of Return (ROR) Method
Rate of Return (ROR) – is the rate paid on the unpaid balance
of borrowed money or the rate earned on the uncovered
balanced of an investment. It is also called as internal rate of
return (IRR), return on investment (ROI) and profitability index
(PI).
𝐚𝐧𝐧𝐮𝐚𝐥 𝐧𝐞𝐭 𝐬𝐚𝐯𝐢𝐧𝐠𝐬

𝐑𝐎𝐑=
𝐚𝐝𝐝𝐢𝐭𝐢𝐨𝐧𝐚𝐥 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭
If
ROR > MARR, select the alternative with the bigger investment
ROR < MARR, select the alternative with the smaller investment
Rate of Return (ROR) Method
The rate of return on the capital invested is
𝐧𝐞𝐭 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐩𝐫𝐨𝐟𝐢𝐭

𝐑𝐎𝐑=
𝐜𝐚𝐩𝐢𝐭𝐚𝐥𝐢𝐧𝐯𝐞𝐬𝐭𝐞𝐝
If ROR > MARR, then investment is profitable

If ROR < MARR, then investment is unprofitable
Sample Problems on
Rate of Return Method
years.
Sample Problems on
Motor A Motor B
Annual Expenses
Taxes 30,000.00 37,500.00
Total Annual Expenses (A1) 309,750.00 291,818.18
Total 328,634.27 315,423.51
Initial Investment 600,000.00 750,000.00
Annual Net Savings 13,210.75
Additional Investment 150,000.00
ROR = 8.81%
MARR = 10.00%
Since ROR < MARR, select motor A (smaller investment)
Sample Problems on
2. Perform an annual worth analysis of equal service
Electric Gas Solar

First Cost, $ 2,500 3,500 6,000
Cost, $
Life, years 5 5 5
Sample Problems on
First Cost, $ 2,500 3,500 6,000
Life, years 5 5 5
Electric Gas
Total Annual Expenses 900.00 700.00
Annual Depreciation 376.73 515.96
Total 1,276.73 1,215.96
Annual Net Savings 60.77
ROR = 6.08%
MARR = 10.00%
select electric
Sample Problems on
First Cost, $ 2,500 3,500 6,000
Life, years 5 5 5
Electric Solar
Total Annual Expenses 900.00 50.00
Annual Depreciation 376.73 966.41
Total 1,276.73 1,016.41
Annual Net Savings 260.33 1,016.41
ROR = 7.44%
MARR = 10.00%
finally select electric powered
Sample Problems on
First Cost, $ 15,000 18,000
Sample Problems on
First Cost, $ 15,000 18,000
Annual Depreciation 1,713.55 1,072.33
Total 5,213.55 4,172.33
Annual Net Savings 1,041.22
ROR = 34.71%
MARR = 10.00%
Since ROR > MARR, select location B (bigger investment)
Sample Problems on
4. A firm is considering purchasing equipment that will

reduce costs by Php40,000. The equipment costs
Php300,000 and has a salvage value of Php50,000 and
a life of 7 years. The annual maintenance cost is
Php6,000. While not used by the firm, the equipment
can be rented to others to generate an income of
Php10,000 per year. If money can be invested for an
8% return, is the firm justified in buying the
equipment?
Sample Problems on
4. A firm is considering purchasing equipment that will reduce costs by Php40,000. The
equipment costs Php300,000 and has a salvage value of Php50,000 and a life of 7 years.
The annual maintenance cost is Php6,000. While not used by the firm, the equipment can be
rented to others to generate an income of Php10,000 per year. If money can be invested for
an 8% return, is the firm justified in buying the equipment?
Gross Capital Profit

Annual Rental 10,000.00
Annual Savings 40,000.00
Total Gross Capital Profit 50,000.00
Annual Expenses
Annual Maintenance 6,000.00
Depreciation 28,018.10
Total Annual Expenses 34,018.10
Initial Investment 300,000.00
MARR 8%
Net Capital Profit 15,981.90
ROR = 5.33%
Since, ROR< MARR do not buy the new eqpt
Payback (Payout) Period Method
In this method, the payback period of each alternative
is computed. The alternative with shortest payback period
is adopted. This method is seldom used.
Payback Period – is the length of time required to recover

the first cost of an investment from the net cash flow
produced by that investment for an interest rate of zero.
𝐜𝐚𝐩𝐢𝐭𝐚𝐥𝐢𝐧𝐯𝐞𝐬𝐭𝐞𝐝
𝐏𝐚𝐲𝐛𝐚𝐜𝐤 𝐏𝐞𝐫𝐢𝐨𝐝=
𝐧𝐞𝐭 𝐚𝐧𝐧𝐮𝐚𝐥 𝐩𝐫𝐨𝐟𝐢𝐭
Sample Problem on
Payback Period Method
In a marble block quarrying operation, hand rock drills, costing
Php50,000 each, are used. It has a drilling rate of 10 cm per minute,
produces 10 cubic meters of block per month and consumes 60 liters
of diesel fuel for compressor drive, per rock drill per cubic meter
produced utilizing 1 worker per drill.
A modern equipment quarry bar mounted rock drill is being offered
for Php180,000 per unit and has a drilling rate of 60 per minute that will
produce 60 cubic meters of block per month, but consumes 120 liters
of diesel fuel for the compressor drive, per 6 cubic meters of block
utilized, utilizing 2 workers per quarry bar drill.
Consider diesel fuel at Php6.00 per liter at the quarries, worker
earning Php80.00 per day, 25 days per month, 5 years life of both drills
with 20% salvage value, neglecting cost of money, other cost at
Php500 per cubic meter and marble blocks sold at Php2,000 per cubic
meter. Would you recommend the purchase of the new equipment?
Sample Problem on
Payback Period Method
In a marble block quarrying operation, hand rock drills, costing Php50,000 each, are used. It has a
drilling rate of 10 cm per minute, produces 10 cubic meters of block per month and consumes 60 liters of
diesel fuel for compressor drive, per rock drill per cubic meter produced utilizing 1 worker per drill.
A modern equipment quarry bar mounted rock drill is being offered for Php180,000 per unit and has a
drilling rate of 60 per minute that will produce 60 cubic meters of block per month, but consumes 120 liters of
diesel fuel for the compressor drive, per 6 cubic meters of block utilized, utilizing 2 workers per quarry bar drill.
Consider diesel fuel at Php6.00 per liter at the quarries, worker earning Php80.00 per day, 25 days per
month, 5 years life of both drills with 20% salvage value, neglecting cost of money, other cost at Php500 per
cubic meter and marble blocks sold at Php2,000 per cubic meter. Would you recommend the purchase of the
new equipment?
hand rock drill mounted rock drill

Capital Investement 50,000.00 180,000.00
Gross Annual Profit
Annual Income 240,000.00 1,440,000.00
Annual Expenses
Annual Fuel Cost 43,200.00 86,400.00
Annual Salary 24,000.00 48,000.00
Annual Depreciation 8,000.00 28,800.00
Other Cost 60,000.00 360,000.00
Net Annual Profit 104,800.00 916,800.00
Payback Period (years) 0.477 0.196
Since payback period of mounted rock drill < payback period of
hand rock drill, purchase the mounted rock drill
Capitalized Cost
Capitalized Cost – is the present worth of an
alternative that will last “forever.” Public sector
projects such as bridges, dams, irrigation systems
and railroad fall into this category.
𝐕 −𝐕 𝐬𝐬 𝐀𝐎𝐂
𝐂𝐂=𝐕 + 𝐧𝐧
+
(𝟏+𝐢) −𝟏 𝐢
Where:
CC = capitalized cost
AOC = annual operating cost
Sample Problems on
Capitalized Cost
Two methods of conveying eater are being studied.
Method A requires a tunnel, first cost Php180,000, life
perpetual, annual operation and upkeep is Php3,000.
Method B requires a ditch plus flume; first cost of ditch is
Php40,000, life perpetual, annual depreciation and
upkeep is Php1,500, first cost of flume is Php30,000, life
10 years, salvage value is Php5,000, annual operation
and upkeep is Php4,000. If money is worth 6%,
determine which method is to be recommended?
Sample Problems on
Capitalized Cost
Two methods of conveying eater are being studied. Method A requires a tunnel, first
cost Php180,000, life perpetual, annual operation and upkeep is Php3,000. Method
B requires a ditch plus flume; first cost of ditch is Php40,000, life perpetual, annual
depreciation and upkeep is Php1,500, first cost of flume is Php30,000, life 10 years,
salvage value is Php5,000, annual operation and upkeep is Php4,000. If money is
worth 6%, determine which method is to be recommended?
method A method B
tunnel ditch flume
First Cost 180,000.00 40,000.00 30,000.00
Annual Depreciation 0.00 0.00 31,611.65
Perpetuity 50,000.00 25,000.00 66,666.67
Total 230,000.00 65,000.00 128,278.32
Method A 230,000.00
Method B 193,278.32
Select method B
Benefit/Cost Ratio Analysis
Benefit/Cost Ratio Analysis – it is the most commonly
used method by government agencies for analyzing the
desirability of public projects.
𝐛𝐞𝐧𝐞𝐟𝐢𝐭𝐬− 𝐝𝐢𝐬𝐛𝐞𝐧𝐞𝐟𝐢𝐭𝐬
𝐁 /𝐂=
𝐜𝐨𝐬𝐭𝐬
If B/C ≥ 1.0, accept the project as economically

acceptable for the estimates and discount rate
applicable.
The benefit cost ratio on the capital invested is
𝒊𝒏𝒄𝒓𝒆𝒎𝒆𝒏𝒕𝒂𝒍𝒃𝒆𝒏𝒆𝒇𝒊𝒕
𝑩 /𝑪=
𝒊𝒏𝒄𝒓𝒆𝒎𝒆𝒏𝒕𝒂𝒍 𝒄𝒐𝒔𝒕
If B/C < 1, select the alternative with the lower

investment/initial cost
If B/C > 1, select the alternative with the higher
investment/initial cost
Significant Differences in the Characteristics
of Public and Private Sector Alternatives
Characteristic Public Sector Private Sector
Some large; more medium to
Size of Investment Larger
small
Life Estimates Longer (30 – 50+ years) Shorter (2 – 25 years)
Annual Cash Flow

Estimates No profit; costs, benefits and Revenues contribute to profits;
disbenefits are estimated costs are estimated
Taxes, fee, bonds, private Stocks, bonds, loans, individual

Funding
funds owners
Higher, based on market cost of

Interest Rate Lower
capital
Alternative Selection
Multiple criteria Primarily based on rate of return
Criteria
Environment of the
Politically inclined Primarily economic
Evaluation
Sample Problems on
1. The National Government intends to build a dam
and hydroelectric project in the Cagayan Valley at
a total cost of Php455,500,000. The project will be
financed by soft foreign loan with an interest of 5%
per year. The annual cost for operation,
maintenance, distribution, facilities and others
would total Php15,100,000. Annual revenues and
benefits are estimated to be Php56,500,000.
If the structures are expected to last for 50
years with no salvage value, is the project
economically acceptable?
Sample Problems on
1. The National Government intends to build a dam and hydroelectric
project in the Cagayan Valley at a total cost of Php455,500,000. The project
will be financed by soft foreign loan with an interest of 5% per year. The
annual cost for operation, maintenance, distribution, facilities and others
would total Php15,100,000. Annual revenues and benefits are estimated to
be Php56,500,000.
If the structures are expected to last for 50 years with no salvage
value, is the project economically acceptable?
Annual Costs (using EUAC method)

Annual Operating
Cost 15,100,000.00
Annuity 24,950,803.01
Total Annual Cost 40,050,803.01
Benefits 56,500,000.00
Disbenefits 0.00
B/C = 1.41
since B/C > 1, the project is economically feasible
Sample Problems on
2. Two routes are under construction for a new highway. Route A would
be located about 5 miles from the central business district and would
require longer travel distances by local commuter traffic. Route B would
pass directly through the downtown area and although its
construction cost would be higher, it would reduce the travel time and
distance for local commuters. The costs for the two roads are as follows:
Route A Route B
Initial Cost, Php 200,000,000 250,000,000
Maintenance per year. Php 700,000 1,100,000
Road user cost per year, Php 10,000,000 4,000,000
If the roads are assumed to last for 30 years with no salvage value, which
route should be accepted on the basis of a benefit/cost ratio analysis
using an interest rate of 15%.
Sample Problems on
2. Two routes are under Route A Route B
construction for a new highway. Initial Cost, Php 200,000,000 250,000,000
Route A would be located about
Maintenance per year. Php 700,000 1,100,000
5 miles from the central
business district and would require Road user cost per year, Php 10,000,000 4,000,000
longer travel distances by local
commuter traffic. Route B would
pass directly through the If the roads are assumed to last for 30 years with no
downtown area and although salvage value, which route should be accepted on
its construction cost would be the basis of a benefit/cost ratio analysis using an
higher, it would reduce the interest rate of 15%.
travel time and distance for Route A Route B
local commuters. The costs for Inital Cost 200,000,000.00 250,000,000.00
the two roads are as follows: Annual Costs (using EUAC
method)
Annual Maintenance 700,000.00 1,100,000.00
Annuity 30,460,039.64 38,075,049.55
Total Annual Costs 31,160,039.64 39,175,049.55
Benefits 10,000,000.00 4,000,000.00
Incremental Benefit 6,000,000.00
Incremental Cost 8,015,009.91
B/C 0.75
Since B/C< 1, select route route A
Sample Problems on
3. Four alternatives for providing electric power
supply to a small town have been identified with the
following annual benefits and costs:
Annual Benefits Annual Costs

Alternative
(Php) (Php)
A 1,528,000 780,000
B 1,398,000 664,000
C 960,000 742,000
D 810,000 420,000
Sample Problems on
3. Four alternatives for providing electric power supply to a small town have been
identified with the following annual benefits and costs:
Alternative Annual Benefits (Php) Annual Costs (Php)

A 1,528,000 780,000
B 1,398,000 664,000
C 960,000 742,000
D 810,000 420,000
A B C D
Annual Cost 780,000.00 664,000.00 742,000.00 420,000.00
Annual Benefits 1,528,000.00 1,398,000.00 960,000.00 810,000.00
Between A and B
B/C 1.12select A
Between C and D
B/C 0.47select D
Finally, between A and D
B/C 1.99select A

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Module 6

Engr. Gerard Ang

2. Methods used in the Selection of Alternatives

Factor Considered Motor A Motor B

Electric Gas Solar

Electric Gas Solar

Total Annual Worth = A1 + A2

Factor Considered Motor A Motor B

Electric Gas Solar

Electric Gas Solar

Electric Gas Solar

Electric Powered Gas Powered Solar Powered

Electric Gas Solar

𝐚𝐧𝐧𝐮𝐚𝐥 𝐧𝐞𝐭 𝐬𝐚𝐯𝐢𝐧𝐠𝐬

The rate of return on the capital invested is

𝐧𝐞𝐭 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐩𝐫𝐨𝐟𝐢𝐭

If ROR > MARR, then investment is profitable

Electric Gas Solar

4. A firm is considering purchasing equipment that will

Gross Capital Profit

Payback Period – is the length of time required to recover

hand rock drill mounted rock drill

If B/C ≥ 1.0, accept the project as economically

The benefit cost ratio on the capital invested is

If B/C < 1, select the alternative with the lower

Life Estimates Longer (30 – 50+ years) Shorter (2 – 25 years)

Annual Cash Flow

Taxes, fee, bonds, private Stocks, bonds, loans, individual

Higher, based on market cost of

Annual Costs (using EUAC method)

Annual Benefits Annual Costs

Alternative Annual Benefits (Php) Annual Costs (Php)

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