Inevitably there will be more than one design that fulfills
the function of a proposed system. In order to select one, there
must be some criterion with which the alternatives can be compared.
An important aspect is the economics of the design. Design decisions
result in several economic effects. If the design is selected,
some investment is required to install the system. After installation,
the system will operate over a period of time while revenues
are generated and operation costs are expended. If alternative
designs are to be compared it is necessary to integrate the
various costs and revenues associated with the design. The economic
criterion compares alternative designs by estimating the cash
flows they generate and describing them with one economic measure.
Common measures are the present worth, annual worth, and internal
rate of return.
The pages of this section illustrate cash flow analysis for
a single project, project evaluation with the Economics add-in,
comparing several alternative designs and project comparisons
with the Economics add-in. More detailed discussions of the
are included in the Computation section.