If i wanted to play it safe and not bother with gradients and the potential errors that could result from that, could I: in any case given (1,2 or 3) I just move all AOC values to the present time and THEN distribute the costs over k number of periods? Thanks Sofia honestly, there isn't an economics channel like yours
Yes, if you feel more comfortable, you can always move each individual cash flow to year zero, add them up, and find A, given P. This would be equivalent to Case 3. (It works with all cases, but it is the longest process, that's why gradients are suggested for Case 2.)
Not sure if this is helpful to you, but I do have some notes regarding gradients. These are for PW, but it compares the gradient formula vs. moving everything to P. You will just need the extra step to find A. docs.google.com/spreadsheets/d/1P8PwUWlvNGkkcAnQs5veksSsMw9jLI3x/edit?usp=drive_link&ouid=102020033114582942067&rtpof=true&sd=true
@@sc_maldonado Ah i just got back from the examination and thanks to your explanations and videos i was able to ace my final as well as every midterm 🥹 Thank you Sofia 💜
how can AW3 is smallest one because of -ve sign it should be largest ........ as in next video when we perform replacement study, due to -ve sign we will assume defender as a numerically largest one & retain it .......... CAN U PLZ EXPLAIN IT MAM
Excuse the confusion in my wording! Yes, in both videos the selected amounts are the 'numerically largest' because they are closer to zero. In this particular example I did say that the ESL is the 'smallest one'... referring to the smallest total AW of costs (not numerically). The closer to zero, the least the cost. Hope this answers your question.
@@sc_maldonado yes mam i understand thanks .... so can i say that if our AW(defender) is > than AW (challenger) we will retain our product & as AW(defender) is < than AW (challenger) we will replace it ......
If i wanted to play it safe and not bother with gradients and the potential errors that could result from that, could I:
in any case given (1,2 or 3) I just move all AOC values to the present time and THEN distribute the costs over k number of periods?
Thanks Sofia honestly, there isn't an economics channel like yours
Yes, if you feel more comfortable, you can always move each individual cash flow to year zero, add them up, and find A, given P. This would be equivalent to Case 3. (It works with all cases, but it is the longest process, that's why gradients are suggested for Case 2.)
Not sure if this is helpful to you, but I do have some notes regarding gradients. These are for PW, but it compares the gradient formula vs. moving everything to P. You will just need the extra step to find A. docs.google.com/spreadsheets/d/1P8PwUWlvNGkkcAnQs5veksSsMw9jLI3x/edit?usp=drive_link&ouid=102020033114582942067&rtpof=true&sd=true
@@sc_maldonado Ah i just got back from the examination and thanks to your explanations and videos i was able to ace my final as well as every midterm 🥹 Thank you Sofia 💜
@@kipskip_546 I am so happy to hear that! Wishing you a very successful career! :)
how can AW3 is smallest one because of -ve sign it should be largest ........ as in next video when we perform replacement study, due to -ve sign we will assume defender as a numerically largest one & retain it .......... CAN U PLZ EXPLAIN IT MAM
Excuse the confusion in my wording! Yes, in both videos the selected amounts are the 'numerically largest' because they are closer to zero. In this particular example I did say that the ESL is the 'smallest one'... referring to the smallest total AW of costs (not numerically). The closer to zero, the least the cost. Hope this answers your question.
@@sc_maldonado yes mam i understand thanks .... so can i say that if our AW(defender) is > than AW (challenger) we will retain our product & as AW(defender) is < than AW (challenger) we will replace it ......
@@muhammadbilalali9412 correct! Your goal is to select the alternative with the better AW value (numerically largest).
@@sc_maldonado thanks mam for your valuable time .... Huge respect
@@muhammadbilalali9412 my pleasure, thank you for watching! Feel free to ask further questions.