Discuss the concept of equivalence if two cash flows

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Reference no: EM131988549

Developing the cash flow for each alternative in a study is a pivotal, and usually the most difficult, step in the engineering economic analysis procedure.

An integrated approach for developing cash flows includes three major components:

(1) a work breakdown structure (WBS) definition of the project,

(2) a cost and revenue structure that identifies all the cost and revenue elements involved in the study, and

(3) estimating techniques (models).

Chapter 4 presented the fundamental time value of money relationships.

Discuss the concept of equivalence if two cash flows (or a series of cash flows are equivalent for a stated interest rate, and under what circumstances you would be willing to trade one for the other.

Reference no: EM131988549

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