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Engineering Economy

by ; ;
Edition:
12th
ISBN13:

9780130673381

ISBN10:
0130673382
Format:
Hardcover
Pub. Date:
1/1/2003
Publisher(s):
PRENTICE HALL
List Price: $122.00
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Summary

New edition provides exciting insights and thought-provoking inquiries into the principles, concepts, and techniques of engineering economy. Previous edition c2000.

Table of Contents

Preface xi
PART I Fundamentals of Engineering Economy 1(148)
Introduction to Engineering Economy
2(21)
Introduction
2(2)
Origins of Engineering Economy
4(1)
What Are the Principles of Engineering Economy?
4(4)
Engineering Economy and the Design Process
8(9)
Accounting and Engineering Economy Studies
17(1)
Overview of the Book
18(2)
Problems
20(3)
Cost Concepts and Design Economics
23(47)
Introduction
23(1)
Cost Estimating and Cost Terminology
24(13)
The General Economic Environment
37(9)
Cost-Driven Design Optimization
46(6)
Present-Economy Studies
52(9)
Summary
61(1)
References
61(1)
Problems
62(8)
Money-Time Relationships and Equivalence
70(79)
Introduction
70(1)
Why Consider Return to Capital?
71(1)
The Origins of Interest
72(1)
Simple Interest
72(1)
Compound Interest
73(1)
The Concept of Equivalence
74(3)
Notation and Cash-Flow Diagrams and Tables
77(4)
Interest Formulas Relating Present and Future Equivalent Values of Single Cash Flows
81(5)
Interest Formulas Relating a Uniform Series (Annuity) to Its Present and Future Equivalent Values
86(7)
Interest Formulas for Discrete Compounding and Discrete Cash Flows
93(1)
Deferred Annuities (Uniform Series)
93(3)
Equivalence Calculations Involving Multiple Interest Formulas
96(4)
Interest Formulas Relating a Uniform Gradient of Cash Flows to Its Annual and Present Equivalents
100(6)
Interest Formulas Relating a Geometric Sequence of Cash Flows to Its Present and Annual Equivalents
106(4)
Interest Rates That Vary with Time
110(1)
Nominal and Effective Interest Rates
111(3)
Interest Problems with Compounding More Often than Once per Year
114(2)
Interest Problems with Cash Flows less Often than Compounding Periods
116(4)
Interest Formulas for Continuous Compounding and Discrete Cash Flows
120(3)
Interest Formulas for Continuous Compounding and Continuous Cash Flows
123(3)
Additional Solved Problems
126(5)
Spreadsheet Applications
131(1)
Summary
131(1)
References
132(1)
Problems
133(16)
PART II Basic Topics in Engineering Economy 149(334)
Applications of Money-Time Relationships
150(47)
Introduction
150(1)
Determining the Minimum Attractive Rate of Return
151(3)
The Present worth Method
154(6)
The Future-Worth Method
160(1)
The Annual-Worth Method
160(4)
The Internal-Rate-of-Return Method
164(11)
The External Rate of Return Method
175(2)
The Payback (Payout) Period Method
177(1)
Investment Balance Diagrams
178(3)
An Example of a Proposed Capital Investment to Improve Process Yield
181(1)
Spreadsheet Applications
182(2)
Summary
184(1)
References
185(1)
Problems
186(11)
Appendix 4-A The Multiple Rate of Return Problem with the IRR Method
194(3)
Comparing Alternatives
197(56)
Introduction
197(1)
Basic Concepts for Comparing Alternatives
198(4)
The Study (Analysis) Period
202(1)
Case 1: Useful Lives Are Equal to the Study Period
203(16)
Case 2: Useful Lives Are Different Among the Alternatives
219(10)
Comparison of Alternatives Using the Capitalized Worth Method
229(2)
Defining Mutually Exclusive Investment Alternatives in Terms of Combinations of Projects
231(6)
Spreadsheet Applications
237(3)
Summary
240(1)
References
241(1)
Problems
241(12)
Depreciation and Income Taxes
253(60)
Introduction
254(1)
Depreciation Concepts and Terminology
254(3)
The Classical (Historical) Depreciation Methods
257(6)
The Modified Accelerated Cost Recovery System
263(8)
A Comprehensive Depreciation Example
271(3)
Depletion
274(3)
Introduction to Income Taxes
277(3)
The Effective (Marginal) Corporate Income Tax Rate
280(4)
Gain (Loss) on the Disposal of an Asset
284(1)
General Procedure for Making After-Tax Economic Analyses
284(5)
Illustration of Computations of ATCFs
289(9)
Economic Value Added
298(2)
The After-Tax Effect of Depletion Allowances
300(2)
Spreadsheet Applications
302(2)
Summary
304(1)
References
304(1)
Problems
305(8)
Cost Estimation Techniques
313(55)
Introduction
313(1)
An Integrated Approach
314(10)
Selected Estimating Techniques (Models)
324(5)
Parametric Cost Estimating
329(11)
Cost Estimation in the Design Process
340(10)
Estimating Cash Flows for a Typical Small Project
350(3)
Summary
353(1)
References
354(1)
Problems
354(14)
Appendix 7-A EXCEL Spreadsheet for Figure 7-5
361(2)
Appendix 7-B An Additional Example of Target Costing
363(5)
Price Changes and Exchange Rates
368(38)
Price Changes
368(2)
Terminology and Basic Concepts
370(11)
Differential Price Inflation or Deflation
381(6)
Application Strategy
387(1)
A Comprehensive Example
388(3)
Foreign Exchange Rates and Purchasing Power Concepts
391(5)
Spreadsheet Applications
396(2)
Summary
398(1)
References
399(1)
Problems
399(7)
Replacement Analysis
406(41)
Introduction
406(1)
Reasons for Replacement Analysis
407(1)
Factors that Must Be Considered in Replacement Studies
408(3)
Typical Replacement Problems
411(3)
Determining the Economic Life of a New Asset (Challenger)
414(2)
Determining the Economic Life of a Defender
416(3)
Comparisons in Which the Defender's Useful Life Differs from That of the Challenger
419(3)
Retirement without Replacement (Abandonment)
422(2)
After-Tax Replacement Studies
424(10)
A Comprehensive Example
434(3)
Spreadsheet Applications
437(1)
Summary
438(1)
References
439(1)
Problems
440(7)
Dealing with Uncertainty
447(36)
Introduction
447(1)
What Are Risk, Uncertainty, and Sensitivity?
448(1)
Sources of Uncertainty
449(1)
Sensitivity Analysis
450(15)
Analyzing a Proposed Business Venture
465(4)
Risk-Adjusted Minimum Attractive Rates of Return
469(1)
Reduction of Useful Life
470(4)
Spreadsheet Applications
474(1)
Summary
475(1)
References
476(1)
Problems
477(6)
PART III Additional Topics in Engineering Economy 483(158)
Evaluating Projects with the Benefit-Cost-Ratio Method
484(35)
Introduction
484(2)
Perspective and Terminology for Analyzing Public Projects
486(1)
Self-Liquidating Projects
487(1)
Multiple-Purpose Projects
487(2)
Difficulties in Evaluating Public-Sector Projects
489(2)
What Interest Rate Should Be Used for Public Projects?
491(1)
The Benefit-Cost-Ratio Method
492(7)
Evaluating Independent Projects by B~ Ratios
499(1)
Comparison of Mutually Exclusive Projects by B-C Ratios
500(7)
Criticisms and Shortcomings of the Benefit-Cost-Ratio Method
507(2)
Spreadsheet Applications
509(2)
Summary
511(1)
References
511(1)
Problems
511(8)
Engineering Economy Studies in Investor-Owned Utilities
519(21)
Background
519(1)
General Characteristics of Investor-Owned Utilities
520(2)
General Concepts of Utility Economy Studies
522(1)
Methods of Engineering Economy for Investor-Owned Utility Projects
522(1)
Development of the Revenue Requirement Method
523(1)
Assumptions of the Revenue Requirement Method
524(1)
Utility-Rate Regulation
525(1)
Flow-Through and Normalized Accounting
526(1)
Illustration of the Revenue Requirement Method: A Tabular Procedure
527(3)
Immediate versus Deferred Investment
530(3)
Revenue Requirement Analysis under Conditions of Inflation
533(2)
Summary
535(1)
References
536(1)
Problems
536(4)
Probabilistic Risk Analysis
540(46)
Introduction
540(1)
The Distribution of Random Variables
541(4)
Evaluation of Projects with Discrete Random Variables
545(8)
Evaluation of Projects with Continuous Random Variables
553(5)
Evaluation of Uncertainty Using Monte Carlo Simulation
558(3)
Performing Monte Carlo Simulation with a Computer
561(6)
Decision Trees
567(8)
Spreadsheet Applications
575(1)
Summary
576(2)
References
578(1)
Problems
578(8)
Capital Financing and Allocation
586(32)
Introduction
586(2)
Differences between Sources of Capital
588(2)
Cost of Debt Capital
590(4)
Cost of Equity Capital
594(4)
Weighted Average Cost of Capital
598(1)
Leasing as a Source of Capital
599(4)
Capital Allocation
603(7)
An Overview of a Typical Corporate Capital Budgeting Process
610(4)
Summary
614(1)
References
614(1)
Problems
614(4)
Dealing with Multiattributed Decisions
618(23)
Introduction
618(1)
Examples of Multiattributed Decisions
619(1)
Choice of Attributes
620(1)
Selection of a Measurement Scale
621(1)
Dimensionality of the Problem
621(1)
Noncompensatory Models
622(5)
Compensatory Models
627(7)
Summary
634(1)
References
634(1)
Problems
635(6)
PART IV Appendixes 641(67)
A Accounting and Its Relationship to Engineering Economy
642(18)
B Abbreviations and Notation
660(5)
C Interest and Annuity Tables for Discrete Compounding
665(19)
D Interest and Annuity Tables for Continuous Compounding
684(4)
E Standardized Normal Distribution Function
688(3)
F Selected References
691(4)
G Answers to Problems
695(13)
Index 708


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