PW, FW, and AW method in engineering economy

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SUMMARY

In engineering economy, the Present Worth (PW), Future Worth (FW), and Annual Worth (AW) methods are interchangeable for comparing alternatives when no specific method is prescribed. Each method provides a different perspective on the value of cash flows over time, but ultimately, the choice of method does not affect the decision-making process as long as the same basis is used for comparison. The greater calculated value indicates the better alternative.

PREREQUISITES
  • Understanding of Present Worth (PW), Future Worth (FW), and Annual Worth (AW) methods
  • Basic knowledge of cash flow analysis
  • Familiarity with time value of money concepts
  • Ability to perform financial calculations
NEXT STEPS
  • Study the differences between Present Worth (PW), Future Worth (FW), and Annual Worth (AW) methods
  • Learn how to calculate cash flows using the time value of money
  • Explore case studies that demonstrate the application of these methods in real-world scenarios
  • Investigate software tools for financial analysis in engineering economy
USEFUL FOR

Students and professionals in engineering, finance, and project management who need to evaluate and compare financial alternatives using various economic analysis methods.

kim1234
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Homework Statement


i just have a simple question. in engineering economy, when you're comparing alternatives and they don't tell you whether to use PW, FW, or AW method, can you just use any one?


Homework Equations





The Attempt at a Solution

 
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kim1234 said:

Homework Statement


i just have a simple question. in engineering economy, when you're comparing alternatives and they don't tell you whether to use PW, FW, or AW method, can you just use any one?


Homework Equations





The Attempt at a Solution


Welcome to the PF.

Could you please define your acronyms and give more details? Can you give an example problem?
 
PW means present worth, AW means annual worth, and FW means future worth. They're methods that allow you to compare alternatives (the greater answer is the better alternative). But it's okay, I just found out that you can in fact use any of these methods to do it. Thanks though! :)
 

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