” While several of the alternatives are essentally maintenance type approaches where we ordinaritly would not expect large year ‘0’ captial costs, for purposes of the paper, let’s assume that the Year 0 costs that are provided are correct even though we may personally have questions about why they are as large as they are. In a real world situation, there could well be costs not spelled out in the alternatives that might result in large Year 0 costs…..remember this is a case from California.
The key to this case is a cash flow diagram and a spreadsheet for each alternative that has a column for each cost element (energy, maintenance, etc.) and a total yearly cost that you can use to calculate the PW. Like many real world engineering problems, the ‘secret’ is structuring the problem. I encourage you not to overthink the problem and ,as noted earlier, to state your assumptions.””
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