This book emphasizes the concepts and techniques of analysis that prove useful in evaluating the economic feasibility of engineering systems, projects, and services for decision purposes. It also familiarizes the engineer with operations and operational feasibility necessary to considerations of the design process. Chapter topics cover economic and cost concepts; interest formula; calculations of economic equivalence; equivalence involving inflation; bases for comparison and decision-making among alternatives; evaluating production operations and replacement alternatives; accounting; income taxes in economic analysis; decisions under risk and uncertainty and involving multiple criteria; and estimating economic elements. For a basic understanding of mathematical modeling in complex operational systems, essential to a growing number of engineers today.
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Some Economic and Cost Concepts
INTEREST FORMULAS AND EQUIVALENCE
ECONOMIC ANALYSIS OF ALTERNATIVES
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activities actual dollars AE(i after-tax cash flow amount analysis annual equivalent Answer applied asset Assume average basis benefit-cost benefit-cost ratio bond book value borrowed calculations compounded annually compounded continuously compounded monthly considered constant-dollar criteria criterion decision depletion depreciation determine disbursements earned economic effective effective interest rate engineering economy equal annual Equal Payment equal-payment-series equipment equivalent cost estimated evaluation example expected F Given F To find factor factor factor factory overhead Figure find F firm fixed costs funds future Given A Given Given F gradient increase incremental cost inflation rate investment loan machine MACRS GDS manufacturing MARR method mutually exclusive nominal interest rate operating costs output payback period plant present worth production profit project balance proposals PW(i receipts replacement result salvage value selected semiannually Single Payment straight-line study period Table tax rate taxable income variable cost yield to maturity