Basics of Engineering Economy 3rd Edition by Leland Blank, ISBN-13: 978-1259875984

Description

Basics of Engineering Economy 3rd Edition by Leland Blank, ISBN-13: 978-1259875984

[PDF eBook eTextbook]

• Publisher: ‎ McGraw Hill; 3rd edition (January 27, 2020)
• Language: ‎ English
• ISBN-10: ‎ 1259875989
• ISBN-13: ‎ 978-1259875984

The Basics of Engineering Economy is designed to assist students in understanding and using the fundamental concepts and methods of economic evaluation to materially enhance rational data-centered decision-making in all these dimensions. This text covers the basic techniques and applications of engineering economy for all disciplines in the engineering profession.

The third edition concentrates on fundamental techniques and their applications, the efficient use of spreadsheets, and a rich coverage of personal financial situations in which engineering economy techniques can be applied easily and rapidly. The text presents the topics in condensed formats when compared to the larger text Engineering Economy.

Table of Contents:

Cover

Format for Spreadsheet Functions on Excel©

Half Title Page

Title Page

Copyright

Dedication

Brief Contents

Contents

Preface

Connect

Chapter 1: Foundations of Engineering Economy 1

Purpose and Learning Outcomes 1

1.1 What Is Engineering Economy? 2

1.2 Performing an Engineering Economy Study 2

1.3 Rates and the Time Value of Money 4

1.4 Equivalence 10

1.5 Simple and Compound Interest 11

1.6 Inflation and Purchasing Power of Money: An Introduction 16

1.7 Terminology and Symbols 20

1.8 Cash Flows: Their Estimation and Diagramming 22

1.9 Introduction to Spreadsheet and Calculator Functions 27

1.10 Ethics and Economic Decisions 30

Summary 35

Problems 35

Additional Problems and FE Exam Review Questions 41

Chapter 2: Factors: How Time and Interest Affect Money 43

Purpose and Learning Outcomes 43

2.1 Single-Payment Formulas (F/P and P/F) 44

2.2 Uniform-Series Formulas (P/A, A/P, A/F, F/A) 50

2.3 Gradient Formulas 54

2.4 Calculations for Cash Flows That Are Shifted 57

2.5 More Examples Using Spreadsheets and Calculators 62

Summary 67

Problems 68

Additional Problems and FE Exam Review Questions 77

Chapter 3: Nominal and Effective Interest Rates 79

Purpose and Learning Outcomes 79

3.1 Nominal and Effective Interest Rate Statements 80

3.2 Effective Interest Rate Formulation 82

3.3 Reconciling Compounding Periods and Payment Periods 85

3.4 Equivalence Calculations Involving Only Single-Amount Factors 86

3.5 Equivalence Calculations Involving Series with PP ≥ CP 87

3.6 Equivalence Calculations Involving Series with PP < CP 90

3.7 Using Spreadsheets for Effective Interest Rate Computations 92

3.8 Understanding Personal Finance Debt and Investments 94

Summary 101

Problems 101

Additional Problems and FE Exam Review Questions 106

Chapter 4: Present Worth Analysis 108

Purpose and Learning Outcomes 108

4.1 Formulating Alternatives 109

4.2 Present Worth Analysis of Equal-Life Alternatives 111

4.3 Present Worth Analysis of Different-Life Alternatives 114

4.4 Capitalized Cost Analysis 118

4.5 Evaluation of Independent Projects: An Introduction 123

4.6 Additional Examples Using Spreadsheets for PW Analysis 125

Summary 127

Problems 128

Additional Problems and FE Exam Review Questions 135

Chapter 5: Annual Worth Analysis 137

Purpose and Learning Outcomes 137

5.1 AW Value and Capital Recovery Calculations 138

5.2 Evaluating Alternatives Based on Annual Worth 140

5.3 AW of a Long-Life or Infinite-Life Investment 143

5.4 Additional Spreadsheet Examples for AW Analysis 146

Summary 148

Problems 148

Additional Problems and FE Exam Review Questions 153

Chapter 6: Rate of Return Analysis 154

Purpose and Learning Outcomes 154

6.1 Interpretation of ROR Values 155

6.2 ROR Calculation 156

6.3 Cautions When Using the ROR Method 161

6.4 Understanding Incremental ROR Analysis 162

6.5 ROR Evaluation of Two or More Mutually Exclusive Alternatives 166

6.6 Multiple ROR Values 170

6.7 Techniques to Remove Multiple ROR Values 174

6.8 More Spreadsheet and Calculator Examples to Determine ROR Values 180

Summary 184

Problems 185

Additional Problems and FE Exam Review Questions 193

Chapter 7: Benefit/Cost Analysis and Public Sector Projects 196

Purpose and Learning Outcomes 196

7.1 Public Sector Projects: Description and Ethics 197

7.2 Benefit/Cost Analysis of a Single Project 202

7.3 Profitability Index for Project Evaluation 205

7.4 Incremental B/C Evaluation of Two or More Alternatives 207

7.5 Using Spreadsheets for B/C Analysis 213

Summary 215

Problems 215

Additional Problems and FE Exam Review Questions 220

Chapter 8: Breakeven, Payback, Sensitivity, and Risk Analysis 222

Purpose and Learning Outcomes 222

8.1 Breakeven Analysis for a Single Project 223

8.2 Breakeven Analysis between Two Alternatives 230

8.3 Payback Period Analysis 233

8.4 Sensitivity Analysis for Variation in Estimates 237

8.5 Sensitivity Analysis of Multiple Parameters for Multiple Alternatives 241

8.6 Using Spreadsheets for Sensitivity or Breakeven Analysis 243

8.7 Fundamentals of Risk in Economic Evaluations 248

8.8 Alternative Evaluation with Risk Considered 257

Summary 263

Problems 264

Additional Problems and FE Exam Review Questions 273

Chapter 9: Replacement and Retention Decisions 276

Purpose and Learning Outcomes 276

9.1 Basics of a Replacement Study 277

9.2 Economic Service Life 279

9.3 Performing a Replacement Study 281

9.4 Defender Replacement Value 289

9.5 Using Spreadsheets for ESL and Replacement Studies 290

Summary 293

Problems 294

Additional Problems and FE Exam Review Questions 299

Chapter 10: Effects of Inflation 302

Purpose and Learning Outcomes 302

10.1 Understanding the Impact of Inflation (and Deflation) 303

10.2 PW Calculations Adjusted for Inflation 306

10.3 FW Calculations Adjusted for Inflation 312

10.4 AW Calculations adjusted for Inflation 318

10.5 Another Spreadsheet Example to Adjust for Inflation 319

Summary 321

Problems 321

Additional Problems and FE Exam Review Questions 325

Chapter 11: Cost Estimation and Allocation 327

Purpose and Learning Outcomes 327

11.1 How Cost Estimates are Made 328

11.2 Unit Method 334

11.3 Cost Indexes 335

11.4 Cost-Estimating Relationships: Cost-Capacity Equations 338

11.5 Cost-Estimating Relationships: Factor Method 340

11.6 Cost-Estimating Relationships: Learning Curve 342

11.7 Indirect Cost Estimation and Allocation 345

Summary 351

Problems 352

Additional Problems and FE Exam Review Questions 356

Chapter 12: Depreciation Methods 358

Purpose and Learning Outcomes 358

12.1 Depreciation Terminology 359

12.2 Straight Line (SL) Depreciation 362

12.3 Declining Balance Depreciation 363

12.4 Modified Accelerated Cost Recovery System (MACRS) 366

12.5 Two More Depreciation Methods 369

12.6 Switching Between Classical Methods; Relation to MACRS Rates 371

12.7 Using Spreadsheets for Depreciation Computations 373

12.8 Depletion Methods 376

Summary 378

Problems 379

Additional Problems and FE Exam Review Questions 383

Chapter 13: After-Tax Economic Analysis 384

Purpose and Learning Outcomes 384

13.1 Fundamentals of Income Taxes: Corporate and Individual 385

13.2 Before-Tax and After-Tax Alternative Evaluation 390

13.3 How Depreciation Can Affect an After-Tax Study 393

13.4 After-Tax Replacement Study 401

13.5 Capital, the Cost of Capital, and Taxes 403

13.6 Using a Spreadsheet for Expanded After-Tax Evaluation 408

13.7 After-Tax Value-Added Analysis 412

Summary 414

Problems 414

Additional Problems and FE Exam Review Questions 422

Chapter 14: Alternative Evaluation Including Noneconomic Attributes 424

Purpose and Learning Outcomes 424

14.1 Overview and Key Attributes 425

14.2 Importance Score and Weight for Each Attribute 426

14.3 Value Rating for Each Alternative 428

14.4 Alternative Evaluation and Selection 429

Summary 431

Problems 431

Additional Problems and FE Exam Review Questions 433

Appendix A: Using Spreadsheets and Microsoft Excel© 435

A.1 Introduction to Using Excel© 435

A.2 Organization (Layout) of the Spreadsheet 438

A.3 Excel Functions Useful in Engineering Economy (alphabetical order) 439

A.4 Goal Seek—A Spreadsheet Tool for Breakeven and Sensitivity Analyses 448

A.5 Error Messages 449

Appendix B: Accounting Reports and Business Ratios 450

B.1 The Balance Sheet 450

B.2 Income Statement and Cost of Goods Sold Statement 451

B.3 Business Ratios 453

Appendix C: Glossary of Terms and Symbols 457

Reference Materials 459

Interest Factor Tables 461

Index 487

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