Annual worth

Strauss Plot R. Strauss (Chem. Eng., pp. 112-116, Mar. 25, 1968) developed a sensitivity plot, in Fig. 9-14, in which the ordinate is a measure of profitabihty and the abscissa is the change in a variable greater than (or less than) the value used in the base case. Where the abscissa crosses the ordinate is the result of the base case of NPW, return, annual worth, etc. The slope of a line on this spider plot is the degree of change in profitability resulting from a change in a... 

The abundance and low cost of light alkanes have generated in recent years considerable interest in their oxidative catalytic conversion to olefins, oxygenates and nitriles in the petroleum and petrochemical industries [1-4]. Rough estimates place the annual worth of products that have undergone a catalytic oxidation step at 20-40 billion worldwide [4]. Among these, the 14-electron selective oxidation of -butane to maleic anhydride (2,5-furandione) on vanadium-phosphorus-oxide (VPO) catalysts is one of the most fascinating and unique catalytic processes [4,5] ... 

The annual worth method converts all cash flows to an equivalent uniform series of equal annual payments. As in the present worth method, if the annual worth of the revenues is greater them the annual worth of the costs for the specified interest rate, then the project is acceptable. The annual worth of alternative j and i percent rate of interest per period, which lasts for n periods, is... 

If two or more alternatives are being compared, the alternative with the gretitest annual worth (cash receipts are positive and disbursements ate negative) is the recommended alternative. 

If you must compare altematives with differing economic lives, the annual worth method is preferred when the repeatability assumption is valid for the analysis. (See Section 4 for a detailed discussion of the comparison of altematives with unequal service lives.) If this assumption is valid, then the annual worth at the time of renewal of the asset is exactly the same as before. Therefore, you are actually comparing the annual worth of two infinite series. 

Brand A is the recommended alternative since it has the greatest annual worth. 

A common method of finding the annual worth of an alternative is... 

ANN, see Artificial neural networks Annual worth method (cost estimating), 2347-2348... 

Here we will discuss three different methods that you can use to choose the best economical alternative from many options. The three methods are commonly referred to as (1) present worth (PW) or present cost analysis, (2) annual worth (AW) or annual cost analysis, and (3) future worth (PW) or future cost analysis. When these methods are applied to a problem, they all lead to the same conclusion. So in practice, you need only apply one of these methods to evaluate options however, in order to show you the details of these procedures, we will apply all of these methods to the preceding problem. 

Annual Worth or Annual Cost Analysis Using this approach, we compute the equivalent annual worth or armual cost value of each alternative and then pick the alternative with the lowest annual cost or select the alternative with the hipest annual worth or revenue. Applying the annual worth analysis to our example problem, we have... 

Note that using this method, we have determined the equivalent annual worth of all cash flow, and because alternative B has a lower annual cost, we choose alternadve B. 

What is the equivalent annual worth of the cash flow given in the accompanying %ure Assume t = 8%. 

The future worth of the second annual payment after (n - 2) years is... 

Let us suppose that 100 is invested at a nominal interest rate of 5 percent. We then compute the future worth of the investment after 2 years and also compute the effective annual interest rate for the following lands of interest (I) simple, (2) annual compound, (3) monthly compound, (4) daily compound, and (5) continuous compound. The following tabulation shows the results of the calculations, along with the appropriate equation to be used ... 

Ck is in excess of Cpc by an amount which, when compounded at an annual interest rate i for n years, will have a future worth of less the salvage or scrap value S. 11 the renewal cost of the equipment remains constant at (Cp S) and the interest rate remains constant at i, then Ck is the amount of capital required to replace the equipment in perpetuity. 

In effec t, in computing the average net annual cash flow per dollar invested, the value of f p of Eq. (9-46) has been obtained for this example. From tables of the annuity present-worth factor/ p the value of the interest rate is found to be = 0.25 when f p = 0.5124 with n = 3 years. 

The annualized capital cost (ACC) is the product of the CRF and TCC and represents the total instaUed equipment cost distributed over the lifetime of the project. The ACC reflects the cost associated with the initial capital outlay over the depreciable life of the system. Although investment and operating costs can be accounted for in other ways such as present-worth analysis, the capital recovery method is preferred because of its simplicity and versatUity. This is especiaUy true when comparing somewhat similar systems having different depreciable lives. In such decisions, there are usuaUy other considerations besides economic, but if all other factors are equal, the alternative with the lowest total annualized cost should be the most viable. 

Thus the requirement for the use of man-made drugs and dietary additives as veterinary medicines for the treatment of farmed animals is considerable and worth about 100 million pounds sterling annually in the UK ( 104 million in 1994j io jjjg investment in dietary additives such as vitamins, trace minerals, coccidiostats, pigmenters, enzymes and other probiotics to feed compounders in the UK is worth about 110 million, assuming an addition rate of 2.5 kg per tonne and a cost of approximately 3% of the total concentrate dietary cost (calculated from MAFF data, 1995). ° These data can be increased by a factor of about 10 when the compound feed produced within Europe is considered. 

United States and the world (Figure 1), despite perceptions that it has been replaced by other sources. In 1997 production ofboth coal (23.2 quadrillion Btus, or about 4.6 billion barrels of oil) and natural gas (19.5 quadrillion Btus, or about 3.9 billion barrels of oil) on an energy equivalent basis exceeded U.S. domestic oil production (13.6 quadrillion Btus, equivalent to about 2.7 billion barrels, or 3.1 billion barrels of oil if natural gas liquids are included). Coal production in the United States nearly doubled from 1970 to 2000 (from about 600 million tons to about 1 billion tons produced annually). Meanwhile, petroleum consumption at 18.6 million barrels of oil per day is near the all-time high of 18.8 million barrels of oil per day in 1978. Net U.S. petroleum imports (8.9 million barrels of oil per day) in 1997 were worth 67 billion and exceeded U.S. petroleum production (8.3 million... 

Expenditure on corrosion prevention is an investment and appropriate accountancy techniques should be used to assess the true cost of any scheme. The main methods used to appraise investment projects are payback, annual rate of return and discounted cash flow (DCF). The last mentioned is the most appropriate technique since it is based on the principle that money has a time value. This means that a given sum of money available now is worth more than an equivalent sum at some future data, the difference in value depending on the rate of interest earned (discount rate) and the time interval. A full description of DCF is beyond the scope of this section, but this method of accounting can make a periodic maintenance scheme more attractive than if the time value of money were not considered. The concept is illustrated in general terms by considering a sum of money P invested at an... 

By the mid 1930 s over 80% of the world s citric add was produced by fermentation. At present virtually all of the world production comes from this process. By 1981 over 200,000 tonnes were produced annually (possibly as high as 300,000 tonnes) the industry in the United Kingdom at that time being worth some 20 million per annum, one tenth of the world s turnover. 

What if instrument manufacturers would adopt specific RMs Until now, there has been a general tendency for instrument manufacturers to avoid admitting the need for RMs. If instrument manufacturers could be convinced to make a serious appraisal of needs in the field, they might provide some resources to help meet those needs (Rasberry 1998). After all, the extra cost of providing suitable RMs, as a part of an annual service contract costing US 20 000 on an instmment that is worth US 2 million is quite insignificant. 

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