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9780071121729

Engineering Economy

by ;
  • ISBN13:

    9780071121729

  • ISBN10:

    0071121722

  • Edition: 5th
  • Format: Hardcover
  • Copyright: 2002-06-01
  • Publisher: McGraw-Hill College

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Summary

This student-friendly text on the current economic issues particular to engineering covers the topics needed to analyze engineering alternatives. Students use both hand-worked and spreadsheet solutions of examples, problems and case studies. In this edition the options have been increased, with an expanded spreadsheet analysis component, twice the number of case studies, and virtually all new end-of-chapter problems. The chapters on factor derivation and usage, cost estimation, replacement studies, and after-tax evaluation have been heavily revised. New material is included on public sector projects and cost estimation. A reordering of chapters puts the fundamental topics up front in the text. Many chapters include a special set of problems that prepare the students for the Fundamentals of Engineering (FE) exam. This college-level text provides students and practicing professionals with a solid preparation in the financial understanding of engineering problems and projects, as well as the techniques needed for evaluating and making sound economic decisions. Distinguishing characteristics include learning objectives for each chapter, an easy-to-read writing style, many solved examples, integrated spreadsheets, and case studies throughout the text. Graphical cross-referencing between topics and quick-solve spreadsheet solutions are indicated in the margins throughout the text. While the chapters are progressive, over three-quarters can stand alone, allowing instructors flexibility for meeting course needs. A complete online learning center (OLC) offers supplemental practice problems, spreadsheet exercises, and review questions for the Fundamentals of Engineering (FE) exam.

Table of Contents

This is How It All Starts
Foundations of Engineering Economy
Why Engineering Economy is Important to Engineers (and other professionals)
Role of Engineering Economy in Decision Making
Performing an Engineering Economy Study
Interest Rate and Rate of Return
Equivalence
Simple and Compound Interest
Terminology and Symbols
Introduction to Solution by Computer
Minimum Attractive Rate of Return
Cash Flows: Their Estimation and Diagramming
Rule of 72: Estimating Doubling Time and Interest Rate
Spreadsheet Application – Simple and Compound Interest, and Changing Cash Flow Estimates Additional Examples Problems, FE Review Problems
Extended Exercise –Effects of Compound Interest
Case Study –Describing Alternatives for Producing Refrigerator Shells
Factors: How Time and Interest Affect Money
Single-Payment Factors (F/P and P/F)
Uniform-Series Present-Worth Factor and Capital-Recovery Factor (P/A and A/P)
Sinking-Fund Factor and Uniform-Series Compound-Amount Factor (A/F and F/A)
Interpolation in Interest Tables
Arithmetic Gradient Factors (P/G and A/G)
Geometric Gradient Series Factors
Determination of an Unknown Interest Rate
Determination of Unknown Number of Years
Spreadsheet Application- Basic Sensitivity Analysis Additional Example Problems, FE Review Problems
Case Study –What a Difference the Years and Compound Interest Can Make
Combining Factors
Calculations for Uniform Series that are Shifted
Calculations Involving Uniform-Series and Random-Placed Single Amounts
Calculations for Shifted Gradients
Shifted Decreasing Arithmetic Gradients
Spreadsheet Application –Using Different Functions Additional Example Problems, FE Review Problems
Extended Exercise –Preserving Land for Public Use
Nominal and Effective Interest Rates
Nominal and Effective Interest Rate Statements
Effective Annual Interest Rates
Effective Interest Rates for Any Time Period
Equivalence Relations: Comparing Payment Period and Compounding Period Lengths (PP vs. CP)
Equivalence Relations: Single Amounts with PP >= CP
Equivalence Relations: Series with PP >= CP
Equivalence Relations: Single Amounts and Series with PP < CP
Effective Interest Rate for Continuous Compounding
Interest Rates that Vary Over Time Problems, FE Review Problems
Case Study –Financing a House
Tools for Evaluating Alternatives
Present Worth Analysis
Formulating Mutually Exclusive Alternatives
Present Worth Analysis of Equal-Life Alternatives
Present Worth Analysis of Different-Life Alternatives
Future Worth Analysis
Capitalized Cost Calculation and Analysis
Payback Period Analysis
Life-Cycle Cost
Present Worth of Bonds
Spreadsheet Applications-PW Analysis and Payback Period Problems, FE Review Problems
Extended Exercise –Evaluation of Social Security Retirement Estimates
Case Study –Payback Evaluation of Ultralow-Flush Toilet Program
Annual Worth Analysis
Advantages and Uses of Annual Worth Analysis
Calculations of Capital Recovery and AW Values
Evaluating Alternatives by Annual Worth Analysis
AW of a Permanent Investment Problems, FE Review Problems
Case Study –The Changing Scene of an Annual Worth Analysis
Rate of Return Analysis: Single Alternative
Interpretation of a Rate of Return Value
Rate of Return Calculation Using a PW or AW Equation
Cautions When Using the ROR Method
Multiple Rate of Return Values
Composite Rate of Return: Removing Multiple i* Values
Rate of Return of a Bond Investment Problems, FE Review Problems
Extended Exercise 1 –The Cost of a Poor Credit Rating
Extended Exercise 2 –When Is It Best to Sell a Business?
Case Study –Bob Learns About Multiple Rates of Return
Rate of Return Analysis: Multiple Alternatives
Why Incremental Analysis Is Necessary
Calculation of Incremental Cash Flows for ROR Analysis
Interpretation of Rate of Return on the Extra Investment
Rate of Return Evaluation Using PW: Incremental and Breakeven
Rate of Return Evaluation Using AW
Incremental ROR Analysis of Multiple Mutually Exclusive Alternatives
Spreadsheet Application – PW, AW, and ROR Analysis All in One Problems, FE Review Problems
Extended Exercise –Incremental ROR Analysis When Estimated Alternative Lives Are Uncertain
Case Study – So Many Options. Can a New Engineering Graduate Help Her Father?
Case Study – PW Analysis When Multiple Interest Rates Are Present
Benefit/Cost Analysis and Public Sector Economics
Public Sector Projects
Benefit/Cost Analysis of a Single Project
Alternative Selection Using Incremental B/C Analysis
Incremental B/C Analysis of Multiple, Mutually Exclusive Alternatives Problems, FE Review Problems
Extended Exercise – Costs to Provide Ladder Truck Service for Fire Protection
Case Study – Freeway Lighting
Making Choices: the Method, MARR, and Multiple Attributes
Comparing Mutually Exclusive Alternatives by Different Evaluation Methods
MARR Relative to the Cost of Capital
Debt-Equity Mix and Weighted Average Cost of Capital
Determination of the Cost of Debt Capital
Determination of the Cost of Equity Capital and the MARR
Effect of Debt-Equity Mix on Investment Risk
Multiple Attribute Analysis: Identification and Importance of Each Attribute
Evaluation Measure for Multiple Attributes Problems
Extended Exercise – Emphasizing the Right Things
Case Study – Which Way to Go - Debt or Equity Financing?
Making Decisions on Real-World Projects
Replacement and Retentions Decisions
Basics of the Replacement Study
Economic Service Life
Performing a Replacement Study
Additional Considerations in a Replacement Study
Replacement Study Over a Specific Study Period Problems
Extended Exercise – Economic Service Life Under Varying Conditions
Case Study – Replacement Analysis for Quarry Equipment
Selection from Independent Projects Under Budget Limitation
An Overview of Capital Rationing Among Projects
Capital Rationing Using PW Analysis of Equal-Life Projects
Capital Rationing Using PW Analysis of Unequal-Life Projects
Capital Budgeting Problem Formulation Using Linear Programming Problems
Case Study – Lifelong Engineering Education in a Web Environment
Breakeven Analysis
Breakeven Analysis for a Single Project
Breakeven Analysis Between Two Alternatives
Spreadsheet Application – Using Excel’s Solver for Breakeven Analysis Problems
Case Study – Water Treatment Process Costs
Rounding Out the Study
Effects of Inflation
Understanding the Impact of Inflation
Present Worth Calculations Adjusted for Inflation
Future Worth Calculations Adjusted for Inflation
Capital Recovery Calculations Adjusted for Inflation Problems, FE Review Problems
Table of Contents provided by Publisher. All Rights Reserved.

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