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Evaluation of Alternatives
- Introduction
This module introduces learners to the basic concepts of the "Time Value of Money" It also reviews the need for financial measures in the alternative selection process.
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Instructional Objectives
- Students should be able to compare simple project cashflow situations and make a choice between projects based upon B/C ratio, NPV, AE, Cap Value, IRR and ERR.
- Given a discrete future cashflow (a series of periodic cash payments and/or disbursements over time length N) compute the NPV (net present value) given the interest rate.
- Be able to draw a cashflow diagram of any given discrete cash stream.
- Students should be able to determine the NPV of a Bond.
- Students should be able to determine the Cap Value of a net revenue stream for a revenue generating asset.
- Students should be able to determine the Payback Period for a revenue generating asset.
- Student Materials
Project Comparisons: PPT / PDF
Interest and NPV: PPT/ PDF
AE and Capital Value: PPT/ PDF
BC Ratio IRR: PPT/ PPT
CE Notes Student Users Guide: PPT/ PDF
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Instructor guide
FE Reference Manual (PDF) / Interest Tables (PDF) /
- Reading Assessment
- Assignment
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Case Study
BC Example XLS
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