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Engineering Economy

by: Sullivan, William G.; Wicks, Elin M.; Luxhoj, James

Engineering Economy

by: Sullivan, William G.; Wicks, Elin M.; Luxhoj, James

ISBN 13:
9780130673381
ISBN 10:
0130673382
Edition: 12th
Format: Hardcover
Copyright: 01/01/2003
Publisher: PRENTICE HALL
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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.

Preface

PART I Fundamentals of Engineering Economy

(148)

Introduction to Engineering Economy

(21)

Introduction

(2)

Origins of Engineering Economy

(1)

What Are the Principles of Engineering Economy?

(4)

Engineering Economy and the Design Process

(9)

Accounting and Engineering Economy Studies

(1)

Overview of the Book

(2)

Problems

(3)

Cost Concepts and Design Economics

(47)

Introduction

(1)

Cost Estimating and Cost Terminology

(13)

The General Economic Environment

(9)

Cost-Driven Design Optimization

(6)

Present-Economy Studies

(9)

Summary

(1)

References

(1)

Problems

(8)

Money-Time Relationships and Equivalence

(79)

Introduction

(1)

Why Consider Return to Capital?

(1)

The Origins of Interest

(1)

Simple Interest

(1)

Compound Interest

(1)

The Concept of Equivalence

(3)

Notation and Cash-Flow Diagrams and Tables

(4)

Interest Formulas Relating Present and Future Equivalent Values of Single Cash Flows

(5)

Interest Formulas Relating a Uniform Series (Annuity) to Its Present and Future Equivalent Values

(7)

Interest Formulas for Discrete Compounding and Discrete Cash Flows

(1)

Deferred Annuities (Uniform Series)

(3)

Equivalence Calculations Involving Multiple Interest Formulas

(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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Engineering Economy

Engineering Economy

9780130673381

0130673382

Summary

Table of Contents

Supplemental Materials

Write a Review

Amazon no longer offers textbook rentals. We do!

Engineering Economy

Engineering Economy

9780130673381

0130673382

Summary

Table of Contents

Supplemental Materials

Write a Review

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