Engineering Economic Decisions

CHAPTER 1: Introduction to Engineering Economic Decisions

• 1.1. Role and Scope of Engineering Economics
• 1.2. Decision-Making Process
• 1.3. Types of Problems in Economic Decisions
• 1.4. Marginal and Average Costs
• 1.4.3. Opportunity Costs and Sunk Costs

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CHAPTER 2: Engineering Costs and Estimation Techniques

• 2.1. Types of Costs: Fixed, Variable, Recurring, Nonrecurring, Incremental
• 2.2. Cash vs Book Costs
• 2.3. Life-Cycle Costing
• 2.4. Estimating Techniques: Unit Model, Segmenting Model, Cost Indices, Power Sizing Models
• 2.5. Learning Curve and Improvement Models

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CHAPTER 3: Cash Flow and Time Value of Money

• 3.1. Cash Flow Diagrams and Classifications
• 3.2. Time Value of Money Concepts
• 3.3. Debt Repayment, Nominal and Effective Interest Rates
• 3.4. Annual Cash Flow and Salvage Value Considerations

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CHAPTER 4: Rate of Return and Incremental Analysis

• 4.1. Rate of Return Calculations and Decision Criteria
• 4.2. Internal Rate of Return (IRR)
• 4.3. Incremental Analysis between Alternatives
• 4.4. Present Worth and Benefit-Cost Ratio Analysis
• 4.5. Sensitivity Analysis and Evaluation in Public Sector Projects

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CHAPTER 5: Inflation and Price Change in Economic Analysis

• 5.1. Inflation and Its Effects
• 5.2. Price Indices: Types, Applications, and Composite Index
• 5.3. Adjusting Cash Flows for Inflation
• 5.4. Borrowed Money vs Personal Funds

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CHAPTER 6: Present Worth Analysis under Inflation and Taxation

• 6.1. End-of-Year Convention and Timing Assumptions
• 6.2. Effect of Inflation, Deflation, and Taxes on Economic Evaluation
• 6.3. Application of Present Worth Techniques in Decision Making
• 6.4. Comparing Multiple Alternatives

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CHAPTER 7: Dealing with Uncertainty in Economic Evaluation

• 7.1. Estimating with Uncertainty
• 7.2. Probability and Joint Distributions
• 7.3. Expected Value Calculations
• 7.4. Economic Decision Trees, Risk Analysis, and Simulation

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CHAPTER 8: Depreciation and Capital Allowances

• 8.1. Concepts of Depreciation and Deterioration
• 8.2. Depreciation Methods: Straight-Line, Declining Balance
• 8.3. Capital Allowances and Tax Regulations
• 8.4. Impact of Depreciation on Engineering Economic Decisions

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CHAPTER 9: Replacement Analysis

• 9.1. Replacement Decision Framework
• 9.2. Marginal Cost and Optimal Replacement Time
• 9.3. Optimal Replacement Time
• 9.4. Analysing Replacement Problems with Economic Criteria

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CHAPTER 10: Accounting Fundamentals for Engineers

• 10.1. Role and Functions of Accounting
• 10.2. Basic Financial Statements: Balance Sheet and Income Statement
• 10.3. Direct and Indirect Costs
• 10.4. Indirect Cost Allocation Techniques
• 10.5. Financial Ratios and Capital Transactions