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Basics of Engineering Economy Table of Contents Chapter One Foundations of Engineering Economy 1.1 What is Engineering Economy? 1.2 Performing an Engineering Economy Study 1.3 Interest Rate, Rate of Return and MARR 1.4 Equivalence 1.5 Simple and Compound Interest 1.6 Terminology and Symbols 1.7 Cash Flows: Their Estimation and Diagramming 1.8 The Rule of 72 1.9 Introduction to Using Spreadsheet Functions Summary Problems Problems for Test Review and FE Exam Practice Chapter Two Factors: How Time and Interest Effect Money 2.1 Single Payment Formulas (F/P and P/F) 2.2 Uniform Series Formulas (P/A, A/P, A/F, F/A) 2.3 Gradient Formulas 2.4 Computations for Cash Flows That are Shifted 2.5 Using Spreadsheets for Equivalency Computations Summary Problems Problems for Test Review and FE Exam Practice Chapter Three Nominal and Effective Interest Rates 3.1 Nominal and Effective Interest Rate Statements 3.2 Effective Interest Rate Formulation 3.3 Reconciling Compounding Periods and Payment Periods 3.4 Equivalence Calculations Involving Only Single Amount Factors 3.5 Equivalence Calculations Involving Series with PP ò CP 3.6 Equivalence Calculations Involving Series with PP < CP 3.7 Using Spreadsheets for Effective Interest Rate Computations Summary Problems Problems for Test Review and FE Exam Practice Chapter Four Present Worth Analysis 4.1 Formulating Alternatives 4.2 Present Worth Analysis of Equal-Life Alternatives 4.3 Present Worth Analysis of Different-Life Alternatives 4.4 Capitalized Cost Analysis 4.5 Evaluation of Independent Projects 4.6 Using Spreadsheets for PW Analysis Summary Problems Problems for Test Review and FE Exam Practice Chapter Five Annual Worth Analysis 5.1 AW Value Calculations 5.2 Evaluating Alternatives Based on Annual Worth 5.3 AW of a Permanent Investment 5.4 Using Spreadsheets for AW Analysis Summary Problems Problems for Test Review and FE Exam Practice Chapter Six Rate of Return Analysis 6.1 Interpretation of ROR Values 6.2 ROR Calculation 6.3 Cautions When Using the ROR Method 6.4 Understanding Incremental ROR Analysis 6.5 ROR Evaluation of Two or More Mutually Exclusive Alternatives 6.6 Multiple ROR Values 6.7 Removing Multiple ROR Values by Using a Reinvestment Rate 6.8 Using Spreadsheets for ROR Analysis Summary Problems Problems for Test Review and FE Exam Practice Chapter Seven Benefit/Cost Analysis and Public Sector Projects 7.1 Public versus Private Sector Projects 7.2 Benefit/Cost Analysis of a Single Project 7.3 Incremental B/C Analysis of Two or More Alternatives 7.4 Using Spreadsheets for B/C Analysis Summary Problems Problems for Test Review and FE Exam Practice Chapter Eight Breakeven, Sensitivity and Payback Analysis 8.1 Breakeven Analysis for a Single Project 8.2 Breakeven Analysis for Two Alternatives 8.3 Sensitivity Analysis for Variation in Estimates 8.4 Sensitivity Analysis of Multiple Parameters for Multiple Alternatives 8.5 Payback Period Analysis 8.6 Using Spreadsheets for Sensitivity or Breakeven Analysis Summary Problems Problems for Test Review and FE Exam Practice Chapter Nine Replacement and Retention Decisions 9.1 Basics of the Replacement Study 9.2 Economic Service Life 9.3 Performing a Replacement Study 9.4 Defender Replacement Value 9.5 Replacement Study Over a Specified Study Period 9.6 Using Spreadsheets for a Replacement Study Summary Problems Problems for Test Review and FE Exam Practice Chapter Ten Effects of Inflation 10.1 Understanding the Impact of Inflation 10.2 PW Calculations Adjusted for Inflation 10.3 FW Calculations Adjusted for Inflation 10.4 AW Calculations Adjusted for Inflation 10.5 Using Spreadsheets to Adjust for Inflation Summary Problems Problems for Test Review and FE Exam Practice Chapter Eleven Estimating Costs 11.1 How Cost Estimates are Made 11.2 Unit method 11.3 Cost Indexes 11.4 Cost-Capacity Equations 11.5 Factor Method 11.6 Learning Curve 11.7 Indirect Cost (Overhead) Estimation and Allocation Summary Problems Problems for Test Review and FE Exam Practice Chapter Twelve Depreciation Methods 12.1 Depreciation Terminology 12.2 Straight Line (SL) Depreciation 12.3 Declining Balance Depreciation 12.4 Modified Accelerated Cost Recovery System (MACRS) 12.5 Switching Between Classical Methods; Relation to MACRS Rates 12.6 Depletion Methods 12.7 Using Spreadsheets for Depreciation Computations Summary Problems Problems for Test Review and FE Exam Practice Chapter Thirteen After-Tax Economic Analysis 13.1 Income Tax Terminology and Relations 13.2 Before-Tax and After-Tax Alternative Evaluation 13.3 How Depreciation Can Affect an After-Tax Study 13.4 After-tax Replacement Study 13.5 Capital Funds and the Cost of Capital 13.6 Using Spreadsheets for After-Tax Evaluation 13.7 After-Tax Value Added Analysis 13.8 Tax Considerations for International Projects Summary Problems Problems for Test Review and FE Exam Practice Appendix A Using Spreadsheets and Microsoft Excel? A.1 Introduction to Using Excel A.2 Organizing of the Spreadsheet A.3 Excel Functions Important to Engineering Economy A.4 GOAL SEEK ? A Simple Tool for Breakeven and Sensitivity Analysis A.5 Error Messages Appendix B Accounting Reports and Business Ratios B.1 The Balance Sheet B.2 Income Statement and Cost of Goods Sold Statements B.3 Business Ratios Appendix C Alternative Evaluation that Includes Multiple Attributes and Risk C.1 Multiple Attribute Evaluation C.2 Economic Evaluation with Risk Considered Appendix D Answers to Problems for Test Review and FE Exam Practice Reference Materials Interest Factor Tables Index

Library of Congress Subject Headings for this publication:

Engineering economy.