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Engineering Economy,9780130115706
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Engineering Economy

by ; ; ;
ISBN13:

9780130115706

ISBN10:
0130115703
Format:
Hardcover
Pub. Date:
9/1/1999
Publisher(s):
Prentice Hall

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This is the edition with a publication date of 9/1/1999.
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  • The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any CDs, lab manuals, study guides, etc.

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Summary

For undergraduate, introductory courses in Engineering Economics. Used by over 500,000 students, this best-selling text provides a sound understanding of the principles, basic concepts, and methodology of engineering economy. Built upon the rich and time-tested teaching materials of earlier editions, it is extensively revised and updated to reflect current trends and issues, with an emphasis on the economics of engineering design throughout. It provides one of the most complete and up-to-date studies of this vitally important field.

Table of Contents

Foreword xiii(2)
Preface xv
PART I Fundamentals of Engineering Economy 1(142)
CHAPTER 1 Introduction to Engineering Economy
2(21)
1.1 Introduction
2(2)
1.2 Origins of Engineering Economy
4(1)
1.3 What Are the Principles of Engineering Economy?
4(4)
1.4 Engineering Economy and the Design Process
8(9)
1.5 Accounting and Engineering Economy Studies
17(1)
1.6 Overview of the Book
18(2)
1.7 Summary
20(1)
1.8 Problems
20(3)
CHAPTER 2 Cost Concepts and Design Economics
23(44)
2.1 Introduction
24(1)
2.2 Cost Estimating and Cost Terminology
24(13)
2.3 The General Economic Environment
37(9)
2.4 Cost-Driven Design Optimization
46(6)
2.5 Present Economy Studies
52(7)
2.6 Summary
59(1)
2.7 References
59(1)
2.8 Problems
59(8)
CHAPTER 3 Money-Time Relationships and Equivalence
67(76)
3.1 Introduction
67(1)
3.2 Why Consider Return to Capital?
68(1)
3.3 The Origins of Interest
69(1)
3.4 Simple Interest
69(1)
3.5 Compound Interest
70(1)
3.6 The Concept of Equivalence
71(3)
3.7 Notation and Cash Flow Diagrams/Tables
74(3)
3.8 Interest Formulas Relating Present and Future Equivalent Values of Single Cash Flows
77(5)
3.9 Interest Formulas Relating a Uniform Series (Annuity) to Its Present and Future Equivalent Values
82(7)
3.10 Interest Formulas for Discrete Compounding and Discrete Cash Flows
89(1)
3.11 Deferred Annuities (Uniform Series)
89(2)
3.12 Equivalence Calculations Involving Multiple Interest Formulas
91(4)
3.13 Interest Formulas Relating a Uniform Gradient of Cash Flows to Its Annual and Present Equivalents
95(6)
3.14 Interest Formulas Relating a Geometric Sequence of Cash Flows to Its Present and Annual Equivalents
101(4)
3.15 Interest Rates That Vary with Time
105(1)
3.16 Nominal and Effective Interest Rates
106(2)
3.17 Interest Problems with Compounding More Often Than Once per Year
108(2)
3.18 Interest Problems with Cash Flows Less Often Than Compounding Periods
110(4)
3.19 Interest Formulas for Continuous Compounding and Discrete Cash Flows
114(2)
3.20 Interest Formulas for Continuous Compounding and Continuous Cash Flows
116(3)
3.21 Additional Solved Problems
119(5)
3.22 Spreadsheet Applications
124(1)
3.23 Summary
125(1)
3.24 References
126(1)
3.25 Problems
126(17)
PART II Basic Topics in Engineering Economy 143(316)
CHAPTER 4 Applications of Money-Time Relationships
144(44)
4.1 Introduction
144(1)
4.2 Determining the Minimum Attractive Rate of Return
145(3)
4.3 The Present Worth Method
148(5)
4.4 The Future Worth Method
153(1)
4.5 The Annual Worth Method
154(3)
4.6 The Internal Rate of Return Method
157(11)
4.7 The External Rate of Return Method
168(2)
4.8 The Payback (Payout) Period Method
170(1)
4.9 Investment Balance Diagrams
171(3)
4.10 An Example of a Proposed Capital Investment to Improve Process Yield
174(1)
4.11 Spreadsheet Applications
175(2)
4.12 Summary
177(1)
4.13 References
178(1)
4.14 Problems
178(8)
Appendix 4-A The Multiple Rate of Return Problem with the IRR Method
186(2)
CHAPTER 5 Comparing Alternatives
188(54)
5.1 Introduction
188(1)
5.2 Basic Concepts for Comparing Alternatives
189(4)
5.3 The Study (Analysis) Period
193(1)
5.4 Case 1: Useful Lives Are Equal to the Study Period
194(17)
5.5 Case 2: Useful Lives Are Different Among the Alternatives
211(9)
5.6 Comparison of Alternatives Using the Capitalized Worth Method
220(2)
5.7 Defining Mutually Exclusive Investment Alternatives in Terms of Combinations of Projects
222(6)
5.8 Spreadsheet Applications
228(3)
5.9 Summary
231(1)
5.10 References
231(1)
5.11 Problems
232(10)
CHAPTER 6 Depreciation and Income Taxes
242(54)
6.1 Introduction
243(1)
6.2 Depreciation Concepts and Terminology
243(3)
6.3 The Classical (Historical) Depreciation Methods
246(6)
6.4 The Modified Accelerated Cost Recovery System
252(7)
6.5 A Comprehensive Depreciation Example
259(3)
6.6 Depletion
262(3)
6.7 Introduction to Income Taxes
265(2)
6.8 The Effective (Marginal) Corporate Income Tax Rate
267(4)
6.9 Gain (Loss) on the Disposal of an Asset
271(1)
6.10 General Procedure for Making After-Tax Economic Analyses
271(5)
6.11 Illustration of Computations of ATCFs
276(8)
6.12 Economic Value Added
284(2)
6.13 The After-Tax Effect of Depletion Allowances
286(2)
6.14 Summary
288(1)
6.15 References
288(1)
6.16 Problems
289(7)
CHAPTER 7 Cost Estimation Techniques
296(53)
7.1 Introduction
296(1)
7.2 An Integrated Approach
297(10)
7.3 Selected Estimating Techniques (Models)
307(5)
7.4 Parametric Cost Estimating
312(10)
7.5 Cost Estimation in the Design Process
322(10)
7.6 Estimating Cash Flows for a Typical Small Project
332(3)
7.7 Summary
335(1)
7.8 References
335(1)
7.9 Problems
336(5)
Appendix 7-A
341(8)
CHAPTER 8 Price Changes and Exchange Rates
349(39)
8.1 Price Changes
350(2)
8.2 Terminology and Basic Concepts
352(10)
8.3 Differential Price Inflation or Deflation
362(6)
8.4 Application Strategy
368(1)
8.5 A Comprehensive Example
369(3)
8.6 Foreign Exchange Rates and Purchasing Power Concepts
372(5)
8.7 Spreadsheet Applications
377(2)
8.8 Summary
379(1)
8.9 References
380(1)
8.10 Problems
380(8)
CHAPTER 9 Replacement Analysis
388(36)
9.1 Introduction
388(1)
9.2 Reasons for Replacement Analysis
389(1)
9.3 Factors That Must Be Considered in Replacement Studies
390(4)
9.4 A Typical Replacement Problem
394(4)
9.5 Determining the Economic Life of a New Asset (Challenger)
398(5)
9.6 Determining the Economic Life of a Defender
403(3)
9.7 Comparisons in Which the Defender's Useful Life Differs from That of the Challenger
406(4)
9.8 Retirement without Replacement (Abandonment)
410(2)
9.9 A Comprehensive Example
412(2)
9.10 Spreadsheet Applications
414(1)
9.11 Summary
415(1)
9.12 References
416(1)
9.13 Problems
417(7)
CHAPTER 10 Dealing with Uncertainty
424(35)
10.1 Introduction
424(1)
10.2 What Are Risk, Uncertainty, and Sensitivity?
425(1)
10.3 Sources of Uncertainty
426(1)
10.4 Sensitivity Analysis
427(14)
10.5 Analyzing a Proposed Business Venture
441(4)
10.6 Risk-Adjusted Minimum Attractive Rates of Return
445(1)
10.7 Reduction of Useful Life
446(3)
10.8 Spreadsheet Applications
449(2)
10.9 Summary
451(1)
10.10 References
451(1)
10.11 Problems
452(7)
PART III Additional Topics in Engineering Economy 459(138)
CHAPTER 11 Evaluating Projects with the Benefit/Cost Ratio Method
460(32)
11.1 Introduction
460(2)
11.2 Perspective and Terminology for Analyzing Public Projects
462(1)
11.3 Self-Liquidating Projects
463(1)
11.4 Multiple-Purpose Projects
463(2)
11.5 Difficulties in Evaluating Public Sector Projects
465(2)
11.6 What Interest Rate Should Be Used for Public Projects?
467(2)
11.7 The Benefit/Cost Ratio Method
469(6)
11.8 Evaluating Independent Projects by B/C Ratios
475(2)
11.9 Comparison of Mutually Exclusive Projects by B/C Ratios
477(5)
11.10 Criticisms and Shortcomings of the Benefit/Cost Ratio Method
482(2)
11.11 Spreadsheet Applications
484(2)
11.12 Summary
486(1)
11.13 References
486(1)
11.14 Problems
486(6)
CHAPTER 12 Engineering Economy Studies in Investor-Owned Utilities
492(22)
12.1 Background
492(1)
12.2 General Characteristics of Investor-Owned Utilities
493(2)
12.3 General Concepts of Utility Economy Studies
495(1)
12.4 Methods of Engineering Economy for Investor-Owned Utility Projects
495(2)
12.5 Development of the Revenue Requirement Method
497(1)
12.6 Assumptions of the Revenue Requirement Method
498(1)
12.7 Utility Rate Regulation
499(1)
12.8 Flow-Through and Normalized Accounting
500(5)
12.9 Illustration of the Revenue Requirement Method: A Tabular Procedure
505(1)
12.10 Immediate versus Deferred Investment
505(1)
12.11 Revenue Requirement Analysis under Conditions of Inflation
505(4)
12.12 Summary
509(1)
12.13 References
510(1)
12.14 Problems
510(4)
CHAPTER 13 Probabilistic Risk Analysis
514(45)
13.1 Introduction
514(1)
13.2 The Distribution of Random Variables
515(4)
13.3 Evaluation of Projects with Discrete Random Variables
519(7)
13.4 Evaluation of Projects with Continuous Random Variables
526(5)
13.5 Evaluation of Uncertainty Using Monte Carlo Simulation
531(4)
13.6 Performing Monte Carlo Simulation with a Computer
535(5)
13.7 Decision Trees
540(8)
13.8 Spreadsheet Applications
548(2)
13.9 Summary
550(1)
13.10 References
551(1)
13.11 Problems
551(8)
CHAPTER 14 Capital Financing and Allocation
559(32)
14.1 Introduction
559(2)
14.2 Differences between Sources of Capital
561(2)
14.3 Cost of Debt Capital
563(4)
14.4 Cost of Equity Capital
567(4)
14.5 Weighted Average Cost of Capital
571(1)
14.6 Leasing as a Source of Capital
572(3)
14.7 Capital Allocation
575(8)
14.8 An Overview of a Typical Corporate Capital Budgeting Process
583(4)
14.9 Summary
587(1)
14.10 References
587(1)
14.11 Problems
587(4)
CHAPTER 15 Communicating Engineering Economy Study Results
591(6)
15.1 Introduction
591(1)
15.2 Top Managers' Roles and Responsibilities
592(1)
15.3 Management's Perspectives
592(2)
15.4 Communication Strategies
594(2)
15.5 Summary
596(1)
PART IV Appendixes 597(57)
APPENDIX 598(58)
A Accounting and Its Relationship to Engineering Economy 598(18)
B Abbreviations and Notation 616(5)
C Interest and Annuity Tables for Discrete Compounding 621(19)
D Interest and Annuity Tables for Continuous Compounding 640(4)
E Standardized Normal Distribution Function 644(3)
F Selected References 647(3)
G Answers to Selected Even-Numbered Problems 650(6)
Index 656


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