An integrated approach for developing cash flows

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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: EM131464223

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