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Fundamentals of Engineering Economics, 1st Edition provides streamlined topical coverage with a modern and pedagogically-rich presentation. This text features a tight integration of Excel along with a wealth of real world vignettes to reinforce how students will use economics in their future careers. Fundamentals of Engineering Economics, 1st Edition provides enough content for every instructor to choose his/her favorite topics, but is streamlined enough to feel approachable to students. A pedagogically-rich approach combined with strong digital offerings make the course manageable, leaving students with the Engineering Economics knowledge needed for future careers.
CHAPTER 1 An Overview of Engineering Economic Analysis 3
Introduction 4
1-1 Time Value of Money 4
1-2 Engineering Economy Principles 7
1-3 Economic Justifi cation of Capital Investments 10
Summary 15
FE-Like Problems 17
Problems 18
CHAPTER 2 Time Value of Money Calculations 23
Introduction 23
2-1 Cash Flow Diagrams 24
2-2 Single Cash Flows 26
2-3 Multiple Cash Flows 35
2-4 Compounding Frequency 55
2.4.1 Period Interest Rate Approach 56
2.4.2 Effective Annual Interest Rate 58
2.4.3 When Compounding and Cash Flow Frequencies Differ 61
Summary 62
FE-Like Problems 67
Problems 69
CHAPTER 3 Equivalence, Loans, and Bonds 93
Introduction 93
3-1 Equivalence 94
3-2 Interest Payments and Principal Payments 100
3-3 Bond Investments 106
3-4 Variable Interest Rates 110
3-5 Annual Percentage Rate 111
Summary 113
FE-Like Problems 114
Problems 116
CHAPTER 4 Present Worth 125
Introduction 126
4-1 Comparing Alternatives 126
4-2 Present Worth Calculations 130
4-3 Benefi t-Cost Analysis 137
4-4 Discounted Payback Period 144
4-5 Capitalized Worth 152
Summary 157
FE-Like Problems 159
Problems 162
CHAPTER 5 Annual Worth and Future Worth 179
Introduction 179
5-1 Annual Worth 180
5-2 Future Worth 185
Summary 194
FE-Like Problems 195
Problems 196
CHAPTER 6 Rate of Return 213
Introduction 214
6-1 Internal Rate of Return Calculations 215
6-2 External Rate of Return Calculations 224
Summary 231
FE-Like Problems 232
Problems 235
CHAPTER 7 Replacement Analysis 257
Introduction 258
7-1 Fundamentals of Replacement Analysis 258
7-2 Cash Flow and Opportunity Cost Approaches 261
7-3 Optimum Replacement Interval 264
Summary 268
FE-Like Problems 269
Problems 271
CHAPTER 8 Depreciation 285
Introduction 286
8-1 The Role of Depreciation in Economic Analysis 287
8-2 Language of Depreciation 288
8-3 Straight-Line and Declining Balance Depreciation Methods 289
8-4 Modifi ed Accelerated Cost Recovery System (MACRS) 296
Summary 301
FE-Like Problems 303
Problems 305
CHAPTER 9 Income Taxes 317
Introduction 317
9-1 Corporate Income Tax Rates 319
9-2 After-Tax Analysis Using Retained Earnings (No Borrowing) 322
9-3 After-Tax Analysis Using Borrowed Capital 330
9-4 Leasing versus Purchasing Equipment 336
Summary 338
FE-Like Problems 340
Problems 342
CHAPTER 10 Inflation 359
Introduction 360
10-1 The Meaning and Measure of Infl ation 360
10-2 Before-Tax Analysis 364
10-3 After-Tax Analysis 367
10-4 After-Tax Analysis with Borrowed Capital 369
Summary 373
FE-Like Problems 375
Problems 377
CHAPTER 11 Break-Even, Sensitivity, and Risk Analysis 391
Introduction 392
11-1 Break-Even Analysis 393
11-2 Sensitivity Analysis 398
11-3 Risk Analysis 405
Summary 418
FE-Like Problems 419
Problems 421
CHAPTER 12 Capital Budgeting 437
Introduction 438
12-1 The Classical Capital Budgeting Problem 438
12-2 Capital Budgeting Problem with Indivisible Investments 440
12-3 Capital Budgeting Problem with Divisible Investments 446
12-4 Practical Considerations in Capital Budgeting 449
Summary 450
FE-Like Problems 451
Problems 453
A P P E N D I X A Time Value of Money Factors Tables 000
A P P E N D I X B Obtaining and Estimating Cash Flows 000
Introduction 000
B-1 Cost Terminology 000
B-2 Cost Estimation 000
B-3 General Accounting Principles 000
B-4 Cost Accounting Principles 000
Summary 000
FE-Like Problems 000
Problems 000