Fundamentals of Engineering Economics 4th Edition Chan S Park-Test Bank

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Desk of contents

PART 1: UNDERSTANDING MONEY AND ITS MANAGEMENT

1. Engineering Monetary Alternatives

1.1 The Rational Alternative-Making Course of
1.1.1 How Do We Make Typical Non-public Alternatives?
1.1.2 How Do We Methodology an Engineering Design Draw back?
1.1.3 What Makes Monetary Alternatives Completely completely different from Completely different Design Alternatives?
1.2 The Engineer’s Operate in Enterprise
1.2.1 Making Capital-Expenditure Alternatives
1.2.2 Large-Scale Engineering Monetary Alternatives
1.2.3 Affect of Engineering Initiatives on Financial Statements
1.3 Varieties of Strategic Engineering Monetary Alternatives
1.3.1 New Merchandise or Product Enlargement
1.3.2 Gear and Course of Alternative
1.3.3 Worth Low cost
1.3.4 Gear Substitute
1.3.5 Service or Top quality Enchancment
1.4 Elementary Guidelines in Engineering Economics
Summary
Self-Check out Questions
Points

2. Time Value of Money

2.1 Curiosity: The Worth of Money
2.1.1 The Time Value of Money
2.1.2 Elements of Transactions Involving Curiosity
2.1.3 Methods of Calculating Curiosity
2.2 Monetary Equivalence
2.2.1 Definition and Straightforward Calculations
2.2.2 Equivalence Calculations Require a Frequent Time Basis for Comparability
2.3 Curiosity Formulation for Single Cash Flows
2.3.1 Compound-Amount Problem
2.3.2 Present-Value Problem
2.3.3 Fixing for Time and Curiosity Costs
2.4 Uneven-Price Assortment
2.5 Equal-Price Assortment
2.5.1 Compound-Amount Problem: Uncover F , Given A , i , and N
2.5.2 Sinking-Fund Problem: Uncover A , Given F , i , and N
2.5.3 Capital-Restoration Problem (Annuity Problem): Uncover A , Given P , i and N
2.5.4 Present-Value Problem: Uncover P , Given A , i , and N
2.5.5 Present Value of Perpetuities
2.6 Dealing with Gradient Assortment
2.6.1 Coping with Linear Gradient Assortment
2.6.2 Coping with Geometric Gradient Assortment
2.7 Additional on Equivalence Calculations
Summary
Self-Check out Questions
Points

3. Understanding Money Administration

3.1 Market Curiosity Costs
3.1.1 Nominal Curiosity Costs
3.1.2 Annual Environment friendly Curiosity Costs
3.2 Calculating Environment friendly Curiosity Costs Based mostly totally on Price Durations
3.2.1 Discrete Compounding
3.2.2 Regular Compounding
3.3 Equivalence Calculations with Environment friendly Curiosity Costs
3.3.1 Compounding Interval Equal to Price Interval
3.3.2 Compounding Occurs at a Completely completely different Price than That at Which Funds are Made
3.4 Debt Administration
3.4.1 Borrowing with Credit score rating Enjoying playing cards
3.4.2 Industrial Loans: Calculating Principal and Curiosity Funds
3.4.3 Evaluating Completely completely different Financing Decisions
Summary
Self-Check out Questions
Points

4. Equivalence Calculations beneath Inflation

4.1 Measure of Inflation
4.1.1 Shopper Worth Index
4.1.2 Producer Worth Index
4.1.3 Widespread Inflation Price
4.1.4 Widespread Inflation Price ( f ) versus Specific Inflation Price ( fj )
4.2 Exact versus Fastened {{Dollars}}
4.2.1 Conversion from Fastened to Exact {{Dollars}}
4.2.2 Conversion from Exact to Fastened {{Dollars}}
4.3 Equivalence Calculations beneath Inflation
4.3.1 Market and Inflation-Free Curiosity Costs
4.3.2 Fastened-Buck Analysis
4.3.3 Exact-Buck Analysis
4.3.4 Mixed-Buck Analysis
Summary
Self-Check out Questions
Points

PART 2: EVALUATING BUSINESS AND ENGINEERING ASSETS

5. Present-Value Analysis

5.1 Mortgage versus Enterprise Cash Flows
5.2 Preliminary Enterprise Screening Methods
5.2.1 Benefits and Flaws of Payback Screening
5.2.2 Discounted-Payback Interval
5.3 Present-Value Analysis
5.3.1 Internet-Present-Value Criterion
5.3.2 Pointers for Deciding on a MARR
5.3.3 Which suggests of Internet Present Value
5.3.4 Internet Future Value and Enterprise Steadiness Diagram
5.3.5 Capitalized-Equal Approach
5.4 Methods to Consider Mutually Distinctive Alternate choices
5.4.1 Doing Nothing Is a Alternative Alternative
5.4.2 Service Initiatives versus Earnings Initiatives
5.4.3 Analysis Interval Equals Enterprise Lives
5.4.4 Analysis Interval Differs from Enterprise Lives
Summary
Self-Check out Questions
Points

6. Annual-Equivalence Analysis

6.1 Annual-Equal Value Criterion
6.1.1 Benefits of AE Analysis
6.1.2 Capital (Possession) Costs versus Working Costs
6.2 Making use of Annual-Value Analysis
6.2.1 Unit-Income or Unit-Worth Calculation
6.2.2 Make-or-Buy Alternative
6.3 Evaluating Mutually Distinctive Initiatives
6.3.1 Analysis Interval Equals Enterprise Lives
6.3.2 Analysis Interval Differs from Enterprise Lives
Summary
Self-Check out Questions
Points

7. Price-of-Return Analysis

7.1 Price of Return
7.1.1 Return on Funding
7.1.2 Return on Invested Capital
7.2 Methods for Discovering Price of Return
7.2.1 Straightforward versus Nonsimple Investments
7.2.2 Computational Methods
7.3 Interior-Price-of-Return Criterion
7.3.1 Relationship to the PW Analysis
7.3.2 Alternative Rule for Straightforward Investments
7.3.3 Alternative Rule for Nonsimple Investments
7.4 Incremental Analysis for Evaluating Mutually Distinctive Alternate choices
7.4.1 Flaws in Enterprise Ranking by IRR
7.4.2 Incremental-Funding Analysis
7.4.3 Coping with Unequal Service Lives
Summary
Self-Check out Questions
Points

8. Revenue-Worth Analysis

8.1 Evaluation of Public Initiatives
8.1.1 Valuation of Benefits and Costs
8.1.2 Prospects’ Benefits
8.1.3 Sponsor’s Costs
8.1.4 Social Low value Price
8.2 Revenue-Worth Analysis
8.2.1 Definition of Revenue-Worth Ratio
8.2.2 Incremental B/C-Ratio Analysis
8.3 Profitability Index
8.3.1 Definition of Profitability Index
8.3.2 Incremental PI Ratio for Mutually Distinctive Alternate choices
8.4 Freeway Revenue-Worth Analysis
8.4.1 Define the Base Case and the Proposed Alternate choices
8.4.2 Freeway Individual Benefits
8.4.3 Sponsors’ Costs
8.4.4 Illustrating Case Occasion
Summary
Self-Check out Questions
Points

PART 3: DEVELOPMENT OF PROJECT CASH FLOWS

9. Accounting for Depreciation and Income Taxes

9.1 Accounting Depreciation
9.1.1 Depreciable Property
9.1.2 Worth as Basis
9.1.3 Useful Life and Salvage Value
9.1.4 Depreciation Methods: E e-book and Tax Depreciation
9.2 E e-book Depreciation Methods
9.2.1 Straight-Line Approach
9.2.2 Declining-Steadiness Approach
9.2.3 Gadgets-of-Manufacturing Approach
9.3 Tax Depreciation Methods
9.3.1 MACRS Restoration Durations
9.3.2 MACRS Depreciation: Non-public Property
9.3.3 MACRS Depreciation: Precise Property
9.4 Firm Taxes
9.4.1 Learn how to Determine “Accounting Income”
9.4.2 U.S. Firm Income Tax Costs
9.4.3 Obtain Taxes on Asset Disposals
Summary
Self-Check out Questions
Points

10. Enterprise Cash-Transfer Analysis

10.1 Understanding Enterprise Worth Elements
10.1.1 Classifying Costs for Manufacturing Environments
10.1.2 Classifying Costs for Financial Statements
10.1.3 Classifying Costs for Predicting Worth Conduct
10.2 Why Do We Need to Use Cash Flows in Monetary Analysis?
10.3 Income-Tax Price to Be Utilized in Enterprise Evaluation
10.4 Incremental Cash Flows from Endeavor a Enterprise
10.4.1 Working Actions
10.4.2 Investing Actions
10.4.3 Financing Actions
10.5 Creating Enterprise Cash Transfer Statements
10.5.1 When Initiatives Require Solely Working and Investing Actions
10.5.2 When Initiatives Are Financed with Borrowed Funds
10.6 Outcomes of Inflation on Enterprise Cash Flows
10.6.1 Depreciation Allowance beneath Inflation
10.6.2 Coping with A quantity of Inflation Costs
Summary
Self-Check out Questions
Points

11. Coping with Enterprise Uncertainty

11.1 Origins of Enterprise Hazard
11.2 Methods of Describing Enterprise Hazard
11.2.1 Sensitivity Analysis
11.2.2 Sensitivity Analysis for Mutually Distinctive Alternate choices
11.2.3 Break-Even Analysis
11.2.4 State of affairs Analysis
11.3 Probabilistic Cash Transfer Analysis
11.3.1 Along with Hazard in Funding Evaluation
11.3.2 Aggregating Hazard over Time
11.3.3 Estimating Harmful Cash Flows
11.4 Considering the Enterprise Hazard by Low value Price
11.4.1 Determining the Agency Worth of Capital
11.4.2 Enterprise Worth of Capital: Hazard-Adjusted Low value Price Methodology
Summary
Self-Check out Questions
Points

PART 4: SPECIAL TOPICS IN ENGINEERING ECONOMIC

12. Substitute Alternatives

12.1 Substitute-Analysis Fundamentals
12.1.1 Major Concepts and Terminology
12.1.2 Approaches for Evaluating Defender and Challenger
12.2 Monetary Service Life
12.3 Substitute Analysis when the Required Service Interval is Prolonged
12.3.1 Required Assumptions and Alternative Frameworks
12.3.2 Coping with Unequal Service Life Points in Substitute Analysis
12.3.3 Substitute Strategies beneath the Infinite Planning Horizon
12.4 Substitute Analysis with Tax Points
Summary
Self-Check out Questions
Points

13. Understanding Financial Statements

13.1 Accounting: The Basis of Alternative Making
13.2 Financial Standing for Corporations
13.2.1 The Steadiness Sheet
13.2.2 The Income Assertion
13.2.3 The Cash-Transfer Assertion
13.3 Using Ratios to Make Enterprise Alternatives
13.3.1 Debt Administration Analysis
13.3.2 Liquidity Analysis
13.3.3 Asset Administration Analysis
13.3.4 Profitability Analysis
13.3.5 Market-Value Analysis
13.3.6 Limitations of Financial Ratios in Enterprise Alternatives
13.3.7 The place We Get the Most Up-to-Date Financial Information
13.4 Principle of Investing in Financial Property
13.4.1 Commerce-Off between Hazard and Reward
13.4.2 Broader Diversification Reduces Hazard
13.4.3 Broader Diversification Will improve Anticipated Return
Summary
Self-Check out Questions
Points

Appendix A Self-Check out Questions with Options
Appendix B Curiosity Components for Discrete Compounding
Appendix C Learn how to Be taught the Cumulative Standardized Common Distribution Function
Appendix D Summary of Vital Curiosity Formulation, Alternative Tips, and Excel Capabilities