Principles of Engineering Economic Analysis, 4th Edition

by John A. White (University of Arkansas ); Kenneth E. Case (Oklahoma State Univ.); David B. Pratt (Oklahoma State Univ.); Marvin H. Agee

• ISBN13: 9780471110279
• ISBN10: 0471110272
• Edition: 4th
• Format: Hardcover
• Copyright: 1998-01-01
• Publisher: Wiley

Summary

This unified examination of economic analysis principles from a cash flow viewpoint, provides a systematic, 7-step approach for performing a comparison of investment alternatives. It offers comprehensive coverage of cost concepts, inflation, ACRS and modern methods of depreciation, income taxes, economic analysis. It features more current economy examples, a new chapter on reality issues, and new material on non-manufacturing examples.

Table of Contents

Chapter 1 Introduction	1	(29)
1.1 Background	1	(1)
1.2 The Problem Solving Process	1	(6)
1.3 Nonmonetary Considerations	7	(4)
1.4 Present Economy Examples	11	(12)
1.5 Overview of the Text	23	(7)
Chapter 2 Time Value of Money Operations	30	(53)
2.1 Introduction	30	(5)
2.2 Cash Flow Diagrams	35	(1)
2.3 Interest Calculations	36	(2)
2.4 Single Sums of Money	38	(2)
2.5 Series of Cash Flows	40	(15)
2.6 Multiple Compounding Periods in a Year	55	(4)
2.7 Continuous Compounding	59	(6)
2.8 Equivalence and Indifference	65	(5)
2.9 Introduction to Measures of Worth	70	(1)
2.10 Summary	71	(12)
Chapter 3 Reality Issues and Practical Applications	83	(25)
3.1 Introduction	83	(1)
3.2 Changing Interest Rates	84	(2)
3.3 Consideration of Inflation	86	(7)
3.4 Principal Amount and Interest Amount in Loan Payments	93	(4)
3.5 Bond Problems	97	(6)
3.6 Special and Limiting Cases of Time Value of Money Factors	103	(1)
3.7 Summary	104	(4)
Chapter 4 Measuring the Worth of Investments	108	(35)
4.1 Introduction	108	(1)
4.2 Methods of Measuring Investment Worth	109	(18)
4.3 Capital Recovery Formula	127	(1)
4.4 Using Spreadsheets to Measure Investment Worth	128	(6)
4.5 Summary	134	(9)
Chapter 5 Comparison of Alternatives	143	(113)
5.1 Introduction	143	(2)
5.2 Defining Investment Alternatives	145	(4)
5.3 Defining the Planning Horizon	149	(6)
5.4 Developing Cash Flow Profiles	155	(3)
5.5 Specifying the MARR	158	(8)
5.6 Comparing the Investment Alternatives	166	(11)
5.7 Performing Supplementary Analyses	177	(26)
5.8 Selecting the Preferred Alternative	203	(6)
5.9 Analyzing Alternatives with No Positive Cash Flows	209	(1)
5.10 More on Dealing with Unequal Lives	210	(3)
5.11 Replacement Analysis	213	(11)
5.12 Summary	224	(32)
Chapter 6 Income Taxes and Depreciation	256	(63)
6.1 Introduction	256	(1)
6.2 Tax Concepts	257	(1)
6.3 Corporate Income Tax--Ordinary Income	257	(2)
6.4 After-Tax Cash Flow	259	(3)
6.5 The Meaning of Depreciation	262	(1)
6.6 Some Definitions Used in Depreciation Accounting	263	(1)
6.7 Traditional (pre-1981) Depreciation Methods Based on Years	264	(4)
6.8 Modified Accelerated Cost Recovery System (MACRS)	268	(10)
6.9 Accelerated Cost Recovery System (ACRS)	278	(1)
6.10 Comparison of Depreciation Methods	279	(2)
6.11 Other Depreciation Methods Not Based on Years	281	(1)
6.12 Effect of Depreciation Method and Recovery Period	282	(5)
6.13 Effect of Interest on Borrowed Money	287	(4)
6.14 Capital Gains, Losses, and Tax Treatment	291	(2)
6.15 Disposition of Depreciable Property	293	(4)
6.16 Investment Tax Credit	297	(1)
6.17 Section 179 Expense Deduction	297	(2)
6.18 Carry-Back and Carry-Forward Rules	299	(1)
6.19 After-Tax Analysis Under Inflation	299	(5)
6.20 Depletion	304	(1)
6.21 International Considerations	305	(2)
6.22 Summary	307	(12)
Chapter 7 Economic Analysis of Projects in the Public and Regulated Sectors	319	(41)
7.1 Introduction	319	(1)
7.2 The Nature of Public Projects	320	(1)
7.3 Objectives in Public Project Evaluation	320	(2)
7.4 Guidelines in Public Sector Evaluation	322	(1)
7.5 Benefit-Cost Analysis	322	(8)
7.6 Important Considerations in Evaluating Public Projects	330	(15)
7.7 Cost-Effectiveness Analysis	345	(3)
7.8 Revenue Requirements Method	348	(4)
7.9 Summary	352	(8)
Chapter 8 Cost Concepts	360	(51)
8.1 Introduction	360	(1)
8.2 Cost Terminology	361	(16)
8.3 Estimation	377	(4)
8.4 General Accounting Principles	381	(9)
8.5 Cost Accounting Principles	390	(7)
8.6 Economic Value Added	397	(2)
8.7 Summary	399	(12)
Appendix Tables	411	(60)
Answers to Even-numbered Problems	471	(9)
Index	480