Discussion
Match the method with what it computes.
1. Present worth 2. Annual worth 3. Capitalised cost
P. Equivalent uniform amount per period Q. Equivalent value at time zero R. Endowment funding a perpetual cost
Answer: A
Correct answer: 1-Q, 2-P, 3-R
Three expressions of the same equivalence. Present worth places the value at time zero; annual worth expresses it as a uniform amount per period; and capitalised cost is the endowment that would fund a cost for ever, which is the present worth of a perpetuity. All three rank alternatives identically.
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