Thursday, October 27, 2011

Lab-5 Payback Period

Question:

In step three i got that the you only save $xxxxx a year. That seems like a very trivial amount of money to save for how much the Incremental Construction cost was. This means it would take xxxx some years to see payback money wise. Why would an engineer want to spend so much more money on this? Especially considering that it was not even any greener CO2 wise to build.

Answer:

You’re discovering why engineers perform these calculations.  It’s as important to determine what makes does not make “sense” as what does. 

What’s also important, and a major reason for this lab, is to see that using different measures of calculating the payback period can produce quite different results.

Finally, often dollar calculations of costs and benefits to the owner do not always take into account the societal costs of various projects.

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