Fundamentals of Engineering Economics

ISBN-10: 0132775425
ISBN-13: 9780132775427
Edition: 3rd 2013 (Revised)
Authors: Chan S. Park
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Description: For Engineering Economics courses, found in departments of Industrial, Civil, Mechanical, and Electrical Engineering. This text is also useful for any individual interested in the field of Industrial, Civil, Mechanical and Electrical  More...

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Book details

List price: $205.00
Edition: 3rd
Copyright year: 2013
Publisher: Prentice Hall PTR
Publication date: 2/6/2012
Binding: Hardcover
Pages: 696
Size: 8.25" wide x 10.25" long x 1.25" tall
Weight: 3.432
Language: English

For Engineering Economics courses, found in departments of Industrial, Civil, Mechanical, and Electrical Engineering. This text is also useful for any individual interested in the field of Industrial, Civil, Mechanical and Electrical Engineering.From the author of the best-selling Contemporary Engineering Economics text, Fundamentals of Engineering Economics offers a concise, but in-depth coverage of all fundamental topics of Engineering Economics.

Understanding Money And Its Management
Engineering Economic Decisions
The Rational Decision-Making Process
How Do We Make Typical Personal Decisions?
How Do We Approach an Engineering Design Problem?
What Makes Economic Decisions Different from Other Design Decisions?
The Engineer's Role in Business
Making Capital-Expenditure Decisions
Large-Scale Engineering Economic Decisions
Impact of Engineering Projects on Financial Statements
Types of Strategic Engineering Economic Decisions
New Products or Product Expansion
Equipment and Process Selection
Cost Reduction
Equipment Replacement
Service or Quality Improvement
Fundamental Principles in Engineering Economics
Summary
Self-Test Questions
Problems
Time Value of Money
Interest: The Cost of Money
The Time Value of Money
Elements of Transactions Involving Interest
Methods of Calculating Interest
Economic Equivalence
Definition and Simple Calculations
Equivalence Calculations Require a Common Time Basis for Comparison
Interest Formulas for Single Cash Flows
Compound-Amount Factor
Present-Worth Factor
Solving for Time and Interest Rates
Uneven-Payment Series
Equal-Payment Series
Compound-Amount Factor: Find F , Given A , i , and N
Sinking-Fund Factor: Find A , Given F , i , and N
Capital-Recovery Factor (Annuity Factor): Find A , Given P , i and N
Present-Worth Factor: Find P , Given A , i , and N
Present Value of Perpetuities
Dealing with Gradient Series
Handling Linear Gradient Series
Handling Geometric Gradient Series
More on Equivalence Calculations
Summary
Self-Test Questions
Problems
Understanding Money Management
Market Interest Rates
Nominal Interest Rates
Annual Effective Yields
Calculating Effective Interest Rates Based on Payment Periods
Discrete Compounding
Continuous Compounding
Equivalence Calculations with Effective Interest Rates
Compounding Period Equal to Payment Period
Compounding Occurs at a Different Rate than That at Which Payments are Made
Debt Management
Borrowing with Credit Cards
Commercial Loans-Calculating Principal and Interest Payments
Comparing Different Financing Options
Summary
Self-Test Questions
Problems
Equivalence Calculations under Inflation
Measure of Inflation
Consumer Price Index
Producer Price Index
Average Inflation Rate
General Inflation Rate ( f ) versus Specific Inflation ( f j )
Actual versus Constant Dollars
Conversion from Constant to Actual Dollars
Conversion from Actual to Constant Dollars
Equivalence Calculations under Inflation
Market and Inflation-Free Interest Rates
Constant-Dollar Analysis
Actual-Dollar Analysis
Mixed-Dollar Analysis
Summary
Self-Test Questions
Problems
Evaluating Business And Engineering Assets
Present-Worth Analysis
Loan versus Project Cash Flows
Initial Project Screening Methods
Benefits and Flaws of Payback Screening
Discounted-Payback Period
Present-Worth Analysis
Net-Present-Worth Criterion
Guidelines for Selecting a MARR
Meaning of Net Present Worth
Net Future Worth and Project Balance Diagram
Capitalized-Equivalent Method
Methods to Compare Mutually Exclusive Alternatives
Doing Nothing Is a Decision Option
Service Projects versus Revenue Projects
Analysis Period Equals Project Lives
Analysis Period Differs from Project Lives
Summary
Self-Test Questions
Problems
Annual-Equivalence Analysis
Annual-Equivalent Worth Criterion
Benefits of AE Analysis
Capital (Ownership) Costs versus Operating Costs
Applying Annual-Worth Analysis
Unit-Profit or Unit-Cost Calculation
Make-or-Buy Decision
Comparing Mutually Exclusive Projects
Analysis Period Equals Project Lives
Analysis Period Differs from Project Lives
Summary
Self-Test Questions
Problems
Rate-of-Return Analysis
Rate of Return
Return on Investment
Return on Invested Capital
Methods for Finding Rate of Return
Simple versus Nonsimple Investments
Computational Methods
Internal-Rate-of-Return Criterion
Relationship to the PW Analysis
Decision Rule for Simple Investments
Decision Rule for Nonsimple Investments
Incremental Analysis for Comparing Mutually Exclusive Alternatives
Flaws in Project Ranking by IRR
Incremental-Investment Analysis
Handling Unequal Service Lives
Summary
Self-Test Questions
Problems
Resolution of Multiple Rates of Return
Net-Investment Test
The Need for an External Interest Rate
Calculation of Return on Invested Capital for Mixed Investments
Benefit-Cost Analysis
Evaluation of Public Projects
Valuation of Benefits and Costs
Users' Benefits
Sponsor's Costs
Social Discount Rate
Benefit-Cost Analysis
Definition of Benefit-Cost Ratio
Incremental B/C-Ratio Analysis
Profitability Index
Definition of Profitability Index
Incremental PI Ratio for Mutually Exclusive Alternatives
Highway Benefit-Cost Analysis
Define the Base Case and the Proposed Alternatives
Highway User Benefits
Sponsors' Costs
Illustrating Case Example
Summary
Self-Test Questions
Problems
Development Of Project Cash Flows
Accounting for Depreciation and Income Taxes
Accounting Depreciation
Depreciable Property
Cost as Basis
Useful Life and Salvage Value
Depreciation Methods: Book and Tax Depreciation
Book Depreciation Methods
Straight-Line Method
Declining-Balance Method
Units-of-Production Method
Tax Depreciation Methods
MACRS Recovery Periods
MACRS Depreciation: Personal Property
MACRS Depreciation: Real Property
Corporate Taxes
How to Determine "Accounting Profit"
U.S. Corporate Income Tax Rates
Gain Taxes on Asset Disposals
Summary
Self-Test Questions
Problems
Project Cash-Flow Analysis
Understanding Project Cost Elements
Classifying Costs for Manufacturing Environments
Classifying Costs for Financial Statements
Classifying Costs for Predicting Cost Behavior
Why Do We Need to Use Cash Flows in Economic Analysis?
Income-Tax Rate to Be Used in Project Evaluation
Incremental Cash Flows from Undertaking a Project
Operating Activities
Investing Activities
Financing Activities
Developing Project Cash Flow Statements
When Projects Require Only Operating and Investing Activities
When Projects Are Financed with Borrowed Funds
Effects of Inflation on Project Cash Flows
Depreciation Allowance under Inflation
Handling Multiple Inflation Rates
Summary
Self-Test Questions
Problems
Handling Project Uncertainty
Origins of Project Risk
Methods of Describing Project Risk
Sensitivity Analysis
Sensitivity Analysis for Mutually Exclusive Alternatives
Break-Even Analysis
Scenario Analysis
Probabilistic Cash Flow Analysis
Including Risk in Investment Evaluation
Aggregating Risk over Time
Estimating Risky Cash Flows
Considering the Project Risk by Discount Rate
Determining the Company Cost of Capital
Project Cost of Capital: Risk-Adjusted Discount Rate Approach
Summary
Self-Test Questions
Problems
Special Topics In Engineering Economic
Replacement Decisions
Replacement-Analysis Fundamentals
Basic Concepts and Terminology
Approaches for Comparing Defender and Challenger
Economic Service Life
Replacement Analysis when the Required Service Period is Long
Required Assumptions and Decision Frameworks
Handling Unequal Service Life Problems in Replacement Analysis
Replacement Strategies under the Infinite Planning Horizon
Replacement Analysis with Tax Considerations
Summary
Self-Test Questions
Problems
Understanding Financial Statements
Accounting: The Basis of Decision Making
Financial Status for Businesses
The Balance Sheet
The Income Statement
The Cash-Flow Statement
Using Ratios to Make Business Decisions
Debt Management Analysis
Liquidity Analysis
Asset Management Analysis
Profitability Analysis
Market-Value
Limitations of Financial Ratios in Business Decisions
Where We Get the Most Up-to-Date Financial Information
Principle of Investing in Financial Assets
Trade-Off between Risk and Reward
Broader Diversification Reduces Risk
Broader Diversification Increases Expected Return
Summary
Self-Test Questions
Problems
Self-Test Questions with Answers
Interest Factors for Discrete Compounding
How to Read the Cumulative Standardized Normal Distribution Function

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