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Preface | |
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The scope of engineering economics | |
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Engineering and investment economics | |
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Long-range planning in business | |
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The investment decision | |
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The scope of engineering economics | |
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Compounding, discounting, and economic equivalence | |
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Time value on money | |
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Compounding | |
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Discounting | |
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Interest rate formulas | |
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Economic equivalence | |
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Cash flow analysis and inflation | |
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Economic modeling | |
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Estimating the life of an investment | |
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The interest rate | |
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The cash flow | |
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Discounting costs or negative cash flows | |
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Incremental cash flows | |
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Inflation and its measurement | |
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Inflation and its impact on cash flows | |
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Choosing between investments | |
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Methods for evaluating investments | |
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Net present value | |
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Internal rate of return | |
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Profitability index | |
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Annual equivalent amount | |
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Capital recovery cost with return | |
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Capitalized equivalent | |
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Payback period | |
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Depreciation, taxes, and cost of capital | |
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The concept of depreciation | |
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Methods of depreciation | |
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Comparison of depreciation methods | |
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Corporate income taxes | |
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Effect of different methods of depreciation on cash flow | |
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The cost of capital | |
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Calculating the marginal cost of capital | |
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Comparing alternative investments | |
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The need to compare alternatives | |
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Constraints to investment | |
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Types of alternatives | |
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Classification of alternatives | |
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Comparing alternatives | |
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Comparing alternatives with different outlays | |
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Comparing alternatives with different timing of a cash flows | |
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Comparing alternatives with different lives | |
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Replacement analysis | |
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Approaches to replacement analysis | |
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The outsider viewpoint approach | |
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Replacement based on uniform annual costs | |
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Replacement based on unequal annual costs | |
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Replacement based on cash flows | |
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Repeated life analysis | |
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Economic life for asset replacement | |
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Project selection | |
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Risk analysis | |
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The concept of risk | |
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Measuring the risk of a project | |
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Example of risk management | |
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Project net present value | |
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Risk-adjusted discount rate approach | |
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NPV of projects based onrisk | |
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Another example of risk-adjusted discount rate | |
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Decision tree analysis | |
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Risk analysis models | |
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Project NPV and risk when cash flows are dependent (perfectly correlated) | |
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Example of NPV and risk of project with dependent cash flows | |
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Project NPV and risk when cash flows are independent (not correlated) | |
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Example of NPV and risk of project with independent cash flows | |
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Determining the probability of NPV being positive | |
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Expected NPV and project risk when cash flows are interdependent (moderately correlated) | |
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Example of conditional probability method for project NPV and risk (interdependent cash flows) | |
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Comparison of projects obased on risk | |
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Capital rationaing methods | |
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NPV approach to capital rationing | |
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Profitability index approach | |
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IRR approach to capital rationing | |
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External capital rationing | |
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External capital rationing | |
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Linear programming for cpaital budgeting | |
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Example of linear programming in cpital budgeting | |
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Problems | |
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Case study | |
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Evaluation of public projects | |
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The nature of public projects | |
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Life-cycle costing of public projects | |
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Life-cycle costing based on present worth | |
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Benefit-cost analysis | |
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The benefit-cost ratio | |
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The discount rate | |
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Benefit-cost analysis of a single project | |
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Alternative BCR formulation | |
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Benefit-cost analysis of mutually exclusive projects | |
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Benefit-cost analysis of three mutually exclusive proposals | |
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Approached to benefit-cost analysis by U S government agencies | |
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Examples of benefit-cost analysis of government projects | |
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Capital budgeting for multiple projects | |
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Selection of projects under capital rationing | |
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Economic decision models | |
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Cost analysis | |
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The production function | |
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The concept of cost | |
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Cost functions | |
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Short-run and long-run costs | |
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Short-run cost function | |
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The feneral (cubic) cost function | |
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Quadratic cost functions | |
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Linear cost functions | |
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Production cost analysis | |
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Cost analysis models | |
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Minimu<$$$> | |