Electrical Engineering License Review, Eigth Edition
This text provides a comprehensive revew detailing all exam topics for the State Electrical Engineers exam for the Practicing Engineers license. It also contains 100+ problems and a sample exam.
TABLE OF CONTENTS Electrical Engineering License Review, Eigth Edition
Future Worth or Value
In present-worth analysis, the comparison is made in terms of the equivalent present costs and benefits. But the analysis need not be made in terms of the present it can be made in terms of a past, present, or future time. Although the numerical calculations may look different, the decision is unaffected by the selected point in time. Often we do want to know what the future situation will be if we take some particular couse of action now. An analysis based on some future point in time is called Future-Worth Analysis.
| Category | Future-Worth Criterion |
|---|---|
| Fixed Input. | Maximize the Future Worth of benefits or other outputs. |
| Fixed Output | Minimize the Future Worth of costs or other inputs. |
| Neither Input nor Output fixed | Maximize Future Worth of benefits minus Future Worth of costs, or Maximize Net Future Worth. |
Example 18
Two alternatives have the following cash flows:
| Alternative | ||
|---|---|---|
| Year | A | B |
| 0 | ?$2000 | ?$2800 |
| 1 | +800 | +1100 |
| 2 | +800 | +1100 |
| 3 | +800 | +1100 |
At a 4% interest rate, which alternative should be selected?
Solution
In Example 16, this problem was solved by Present-Worth analysis at Year 0. Here it will be solved by Future-Worth analysis at the end of Year 3.
To maximize NFW, choose Alternative B.
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