Future Worth and Annual Worth Analysis - Worked Examples

Example 1 — Future worth of PHP 500,000 today at 8% for 6 years.

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Example 2 — Future worth of PHP 100,000/year for 5 years at 7%.

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Example 3 — Annual worth of PHP 1.5M present cost over 8 years at 9%.

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Example 4 — Capital recovery for PHP 2.4M first cost, PHP 400k salvage, 6-year life, 8%.

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Example 5 — Asset AW: PHP 4M first cost, PHP 1M annual net inflow, PHP 400k salvage, 8 years, 9%.

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Example 6 — Check sign consistency if a project's PW is PHP 600k over 10 years at 8%.

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Example 7 — Compare cost-only alternatives: A has EAC PHP 620k/year and B has EAC PHP 590k/year for equal service.

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Example 8 — Compare revenue alternatives with AW of PHP 140k/year and PHP 220k/year on the same basis.

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Example 9 — Unequal lives: a 4-year pump and a 7-year pump serve an indefinitely continuing station. Why can EAC be appropriate?

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Example 10 — Unequal lives with a fixed 10-year project that ends permanently. Why may own-life AW be inappropriate?

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