Schedule Benefits and Costs:

For each of the alternatives defined in step 2, the user now identifies the value of each benefit and cost for each year through the life cycle of the decision beginning from Year 0, which is the start of the decision life. After the costs and benefits for each year of the system life cycle have been estimated, convert them to a common unit of measurement to properly compare competing alternatives. That is accomplished by discounting future values, which transforms future benefits and costs to their “present value.” The present value (also referred to as the discounted value) of a future amount is calculated with the following formula:P = F (1/(1+I)n), where P = Present Value, F = Future Value, I = Interest Rate, and n = number of years.

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