Consider two design alternative each with a 10-year design life and the following cash flows: initial con- struction Uj; annual operating costs, Ej; annual maintenance costs, Mj; and salvage cost, Sj, at the end of the design life (analysis period). The alternatives are the same with only one exception: for Alternative 1, there is an amount (a benefit) in Year 1, while for Alternative 2 that amount (benefit) occurs in Year 9.
(a) Which alternative is superior?
(b) If the amounts were costs and not benefits, which alternative would be superior?
(c) What conclusions can you draw from your answers to (a) and (b) about the influence of the timing of amount occurrence on economic evaluation.