How are sunk costs included in engineering economy

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Reference no: EM13214070

1. What are sunk costs and how are they included in engineering economy analyses?

2. Why is a common analysis period necessary in comparing mutually exclusive alternatives by the Present Worth method but is not necessary in the Equivalent Uniform Annual Cash Flow method?

3. Based on a Rate-of-Return analysis of alternatives A & B alternative B was selected. A Net Equivalent Uniform Annual analysis of the same alternatives led to the selection of alternative A. Describe the circumstances which could lead to this outcome.

4. Why is the somewhat unrealistic assumption often made that when a capital asset has reached the end of its useful life, it is replaced by an indentical replacement (with the same costs, performance, and so forth)?

Reference no: EM13214070

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