Textbook
Fundamentals of Engineering Economic Analysis First EditionAugust 2013, ©2014

Description
Table of Contents
CHAPTER 1 An Overview of Engineering Economic Analysis 3
Learning Objectives 4
Introduction 4
11 Time Value of Money 4
12 Engineering Economy Principles 7
13 Economic Justification of Capital Investments 10
Summary 15
Key Terms 16
FELike Problems 17
Problems 18
CHAPTER 2 Time Value of Money Calculations 23
Learning Objectives 23
Introduction 23
21 Cash Flow Diagrams 24
22 Single Cash Flows 26
23 Multiple Cash Flows 35
24 Compounding Frequency 55
Summary 62
Key Terms 66
FELike Problems 67
Problems 69
CHAPTER 3 Equivalence, Loans, and Bonds 93
Learning Objectives 93
Introduction 93
31 Equivalence 94
32 Interest Payments and Principal Payments 100
33 Bond Investments 106
34 Variable Interest Rates 110
35 Annual Percentage Rate 111
Summary 113
Key Terms 114
FELike Problems 114
Problems 116
CHAPTER 4 Present Worth 125
Learning Objectives 125
Introduction 126
41 Comparing Alternatives 126
42 Present Worth Calculations 130
43 BenefitCost Analysis 137
44 Discounted Payback Period 144
45 Capitalized Worth 152
Summary 157
Key Terms 159
FELike Problems 159
Problems 162
CHAPTER 5 Annual Worth and Future Worth 179
Learning Objectives 179
Introduction 179
51 Annual Worth 180
52 Future Worth 185
Summary 194
Key Terms 194
FELike Problems 195
Problems 196
CHAPTER 6 Rate of Return 213
Learning Objectives 213
Introduction 214
61 Internal Rate of Return Calculations 215
62 External Rate of Return Calculations 224
Summary 231
Key Terms 232
FELike Problems 232
Problems 235
CHAPTER 7 Replacement Analysis 257
Learning Objectives 258
Introduction 258
71 Fundamentals of Replacement Analysis 258
72 Cash Flow and Opportunity Cost Approaches 261
73 Optimum Replacement Interval 264
Summary 268
Key Terms 269
FELike Problems 269
Problems 271
CHAPTER 8 Depreciation 285
Learning Objectives 286
Introduction 286
81 The Role of Depreciation in Economic Analysis 287
82 Language of Depreciation 288
83 StraightLine and Declining Balance Depreciation Methods 289
84 Modified Accelerated Cost Recovery System (MACRS) 296
Summary 301
Key Terms 303
FELike Problems 303
Problems 305
CHAPTER 9 Income Taxes 317
Learning Objectives 317
Introduction 317
91 Corporate Income Tax Rates 319
92 AfterTax Analysis Using Retained Earnings (No Borrowing) 322
93 AfterTax Analysis Using Borrowed Capital 330
94 Leasing versus Purchasing Equipment 336
Summary 338
Key Terms 340
FELike Problems 340
Problems 342
CHAPTER 10 Inflation 359
Learning Objectives 359
Introduction 360
101 The Meaning and Measure of Inflation 360
102 BeforeTax Analysis 364
103 AfterTax Analysis 367
104 AfterTax Analysis with Borrowed Capital 369
Summary 373
Key Terms 375
FELike Problems 375
Problems 377
CHAPTER 11 BreakEven, Sensitivity, and Risk Analysis 391
Learning Objectives 391
Introduction 392
111 BreakEven Analysis 393
112 Sensitivity Analysis 398
113 Risk Analysis 405
Summary 418
Key Terms 419
FELike Problems 419
Problems 421
CHAPTER 12 Capital Budgeting 437
Learning Objectives 438
Introduction 438
121 The Classical Capital Budgeting Problem 438
122 Capital Budgeting Problem with Indivisible Investments 440
123 Capital Budgeting Problem with Divisible Investments 446
124 Practical Considerations in Capital Budgeting 449
Summary 450
Key Terms 451
FELike Problems 451
Problems 453
APPENDIX A
a Single Sums, Uniform Series, and Gradient Series Interest Factors 471
b Geometric Series Present Worth Interest Factors 496
c Geometric Series Future Worth Interest Factors 501
APPENDIX B
Obtaining and Estimating Cash Flows 507
B1 Introduction 506
B2 Cost Terminology 508
B3 Cost Estimation 530
B4 General Accounting Principles 537
B5 Cost Accounting Principles 550
Summary 561
FELike Problems 562
Problems 563
ANSWERS TO SELECTED EVEN NUMBERED PROBLEMS 577
INDEX 599
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