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Advantages of AW Analysis
AW calculated for only one life cycle
Annual amount, A – Cash flows associated with asset, such as annual operating cost
(AOC), etc.
$ 5000
i = 10%
AW1 = ?
0 1 2 3
A = $ 8000
$ 20000
$ 5000 $ 5000
i = 10%
AW2 = ?
0 1 2 3 4 5 6
A = $ 8000
$ 20000 $ 20000
CR = -P(A/P,i%,n) + S(A/F,i%,n)
Now AW = CR + A
AW = – 6532 – 8000 = $ – 14,532
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