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Each chapter concludes with a Summary | |
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Basic Concepts and Tools | |
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Making Economic Decisions | |
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What Is Engineering Economy? | |
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Principles for Decision Making | |
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The Decision-Making Process | |
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The Environment for Decisions | |
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The Role of Engineering Economy | |
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Operational Economics | |
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The Time Value of Money | |
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What is Interest? | |
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Simple vs. Compound Interest | |
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Cash Flow Diagrams | |
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Equivalence for 4 loans | |
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Limits on Equivalence | |
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Compounding Periods Shorter than a Year | |
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Equivalence-A Factor Approach | |
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Definitions and Assumptions | |
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Tables of Engineering Economy Factors | |
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Single-Payment Factors (P and F) | |
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Uniform Flows | |
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Combining Factors | |
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Arithmetic Gradients | |
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Geometric Gradients | |
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Continuous Flow and Continuous Compounding | |
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Spreadsheets and Economic Analysis | |
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Using Spreadsheets for Economic Analysis | |
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Spreadsheet Modeling | |
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Financial Functions in Spreadsheets | |
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Examples Show Spreadsheet Models Can Be More Realistic | |
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Using Spreadsheets to Get a Project Funded | |
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Analyzing a Project | |
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Present Worth | |
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The PW Measure | |
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Examples of When to Use PW | |
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Rolling Back Irregular Cash Flows for PW Calculations | |
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Salvage Values | |
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Capitalized Cost and Perpetual Life | |
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Staged Projects | |
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Cost of Underutilized Capacity | |
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Spreadsheets and Shorter Periods | |
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Spreadsheets and More Exact Models | |
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Equivalent Annual Worth | |
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The Equivalent Annual Worth Measure | |
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Assumptions and Sign Conventions | |
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Examples of Annual Evaluations | |
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Finding the EAC of "Irregular" Cash Flows | |
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EAC Formulas for Salvage Values and Working Capital | |
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Perpetual Life | |
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Repeated Renewals | |
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Spreadsheets and Analyzing Loan Repayments | |
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Internal Rate of Return | |
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The Internal Rate of Return | |
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Assumptions | |
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Finding the IRR | |
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Loans and Leases | |
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Spreadsheets and the IRR | |
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Multiple Sign Changes | |
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Project Balances over Time | |
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Modified Internal Rate of Return (MIRR) | |
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Benefit/Cost Ratios and Other Measures | |
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Measures of Economic Attractiveness | |
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Benefit/Cost Ratio | |
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Present Worth Indexes | |
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Future Worth | |
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Payback Period | |
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Discounted Payback | |
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Breakeven Volume | |
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Comparing Alternatives and Projects | |
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Mutually Exclusive Alternatives | |
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Applying Engineering Economy to Engineering Design | |
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Key Assumption Is the Interest Rate or Minimum Attractive Rate of Return | |
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Comparing Alternatives with Lives of the Same Length | |
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PWs and Explicitly Comparing Different-Length Lives | |
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EAWs and EACs and Implicity Comparing Different-Length Lives | |
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Using EAC for Different-Length Lives Is a Robust Approach | |
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B/C and IRR Comparisons of Mutually Exclusive Alternatives Require Incremental Analysis | |
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Defender/Challenger Analysis | |
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PW, EAW, and IRR Have the Same Reinvestment Assumption | |
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Using Spreadsheet GOAL SEEK Tool to Calculate Incremental IRRs | |
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Replacement Analysis | |
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Why Is Equipment Replaced, Retired, or Augmented? | |
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Old and New Are Mutually Exclusive | |
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Sunk Costs, Risks, and Cost Savings vs | |
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Optimal Challengers | |
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Optimal Defenders | |
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Optimal Capacity Problems | |
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Estimating Future Challengers | |
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Replacement and Repair Models | |
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Constrained Project Selection | |
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The Constrained Project Selection Problem | |
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Ranking Projects | |
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Determining the Minimum Attractive Rate of Return Using the Opportunity Cost of Capital | |
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A Theoretically Optimal Approach for Determining the Capital Budget | |
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Capital Limits in the Real World | |
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Matching Assumptions to the Real World | |
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Present Worth Indexes and Benefit/Cost Ratios | |
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Using the SORT Spreadsheet Tool | |
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Mathematical Programming and Spreadsheets | |
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Enhancements for the Real World | |
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Depreciation | |
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Introduction | |
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Basic Depreciation Methods | |
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Accelerated Cost Recovery | |
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Gains and Losses on Sales and Recaptured Depreciation | |
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Optimal Depre | |