Engineering economics for capital investment analysis:
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
Englewood Cliffs, NJ
Prentice Hall
1992
|
| Edition: | 2. ed. |
| Subjects: | |
| Online Access: | Inhaltsverzeichnis |
| Physical Description: | XIII, 540 S. graph. Darst. |
| ISBN: | 013278193X |
Staff View
MARC
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| 100 | 1 | |a Au, Tung |e Verfasser |4 aut | |
| 245 | 1 | 0 | |a Engineering economics for capital investment analysis |c Tung Au ; Thomas P. Au |
| 250 | |a 2. ed. | ||
| 264 | 1 | |a Englewood Cliffs, NJ |b Prentice Hall |c 1992 | |
| 300 | |a XIII, 540 S. |b graph. Darst. | ||
| 336 | |b txt |2 rdacontent | ||
| 337 | |b n |2 rdamedia | ||
| 338 | |b nc |2 rdacarrier | ||
| 650 | 4 | |a Engineering - Finance - Management | |
| 650 | 7 | |a Investeringen |2 gtt | |
| 650 | 7 | |a Kapitaalinvesteringen |2 gtt | |
| 650 | 4 | |a Ingenieurwissenschaften | |
| 650 | 4 | |a Capital investments |x Evaluation | |
| 650 | 4 | |a Engineering economy | |
| 700 | 1 | |a Au, Thomas P. |e Verfasser |4 aut | |
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| 999 | |a oai:aleph.bib-bvb.de:BVB01-003704261 | ||
Record in the Search Index
| _version_ | 1804120106289070080 |
|---|---|
| adam_text | Contents
PREFACE
1 INTRODUCTION ,
I ¦ I Engineering Project Development 1
1.2 The Decision Making Process 2
1.3 Resource Allocation Decisions for Public Projects 4
1 4 Capital Investment Decisions in Private Ventures 7
1.5 The Role of Engineering Economic Analysis 9
1.6 Summary and Study Guide 10
2 BASIC CONCEPTS OF CAPITAL INVESTMENT 12
2.1 The Nature of Investment 12
2.2 Time Preference 13
2.3 A Simplified View of the Market Economy 15
2.4 The Classification of Investment Projects 16
2.5 The Cash Flow Profile of an Investment Proposal 18
2.6 Objective of Capital Investment 19
2.7 Decision Criteria for Direct Merit Measures 22
2.8 Decision Criteria for Indirect Merit Measures 24
2.9 Comparison of Merit Measures for Economic Analysis 29
2.10 The Role of Financial Analysis in Capital Investment 31
2.11 Summary and Study Guide 34
iii
jv Contents
3 COMPOUND INTEREST FORMULAS AND APPLICATIONS 38
3.1 Time Value of Money 38
3.2 Equivalence of Cash Flows 40
3.3 Relationship Between Single Sums 42
3.4 Decomposition and Superposition of Cash Flows 43
3.5 Uniform Series of Cash Flows 48
3.6 Functional Notation and Compound Interest Tables 52
3.7 Cash Flows in Linear Gradients 57
3.8 Computation of Unknown Interest Rate 63
3.9 Annual Percentage Rate 68
3.10 Continuous Compounding Interest Formulas 71
3.11 Summary and Study Guide 74
4 DISCOUNTED CASH FLOWS AND RATES OF RETURN 79
4.1 Investment and Borrowing Cash Flow Profiles 79
4.2 Net Present Value and Net Future Value 81
4.3 The Internal Rate of Return 83
4.4 Solving for the Internal Rate of Return 87
4.5 Internal Rate of Return in Borrowing 96
4.6 Internal Rate of Return from Investment 103
4.7 Reinvestment and Financing Policies 108
4.8 Overall Rate of Return 111
4.9 Comparison of Merit Measures 114
4.10 Summary and Study Guide 116
5 THE ECONOMIC FEASIBILITY OF INDEPENDENT
PROJECTS 120
5.1 Basic Principles of Economic Evaluation 120
5.2 The Planning Horizon 121
5.3 Cash Flow Profiles 125
5.4 The Minimum Attractive Rate of Return 128
5.5 Investment Objectives and Merit Measures 130
5.6 The Net Present Value Criterion 131
5.7 The NPV versus / Graph 134
5.8 Net Equivalent Uniform Annual Value Criterion 137
5.9 The Internal Rate of Return Criterion 139
5.10 The Overall Rate of Return Criterion 140
5.11 The Payback Period Criterion 141
5.12 Comparison of Merit Measures 143
5.13 Sensitivity Analysis of Net Present Values 143
5.14 Summary and Study Guide 146
vi Contents
9 CAPITAL BUDGETING 246
9.1 Basic Concepts 246
9.2 Capital Rationing 248
9.3 Selecting a Group of Independent Projects under
Budget Constraints 250
9.4 Ranking Independent Projects under Budget Constraints
on the Basis of Overall Rates of Return 255
9.5 Project Financing 258
9.6 Effects of Different Financing Plans 262
9.7 Transaction Costs in Financing 268
9.8 Leasing as a Financing Instrument 270
9.9 Summary and Study Guide 272
10 PRICE LEVEL CHANGES 276
10.1 Inflation and Deflation 276
10.2 General Price Indices 277
10.3 Annual Percent Changes in Price Indices 278
10.4 Special Price Indices 280
10.5 Forecasting General Price Changes 281
10.6 Effects of Price Changes on Economic Evaluation 282
10.7 The Constant Price Approach 286
10.8 The Current Price Approach 287
10.9 Differential Price Change Rates 288
10.10 Obligated Cash Flows in Budgeting for Capital Projects 293
10.11 Summary and Study Guide 293
11 DEPRECIATION 297
11.1 Depreciation as a Tax Deduction 297
11.2 Depreciation Regulations 298
11.3 Accounting Cash Flow Profile 299
11.4 Straight Line Depreciation 301
11.5 Sum of the Years Digits Depreciation 302
11.6 Declining Balance Depreciation 304
11.7 Double Declining Balance Depreciation 306
11.8 Units of Production Depreciation 309
11.9 Comparison of Depreciation Methods 310
11.10 Multiple Asset Depreciation 311
11.11 Summary and Study Guide 312
12 CORPORATE TAXATION 315
12.1 Federal Tax Laws 315
12.2 State and Local Taxes 317
Contents vjj
12.3 Corporate Tax Planning 318
12.4 After Tax Cash Flows 319
12.5 Evaluation of After Tax Cash Flows 322
12.6 Effects of Deduction for Depreciation 325
12.7 Effects of Deduction for Interest 329
12.8 Purchase versus Lease 330
12.9 Effects of Debt Size 332
12.10 Effects of Inflation on Equity Financed Projects 332
12.11 Effects of Inflation on Debt Financed Projects 337
12.12 Effects of Capital Gains 338
12.13 Summary and Study Guide 341
13 PRODUCTION COST AND BENEFIT ESTIMATION 346
13.1 Costs and Benefits in Production 346
13.2 Production Costs and Output Volume 347
13.3 Average Cost and Marginal Cost 349
13.4 Benefit Estimation in Production 351
13.5 Pricing Strategies and Profit Maximization 353
13.6 Linear Break Even Analysis 354
13.7 Nonlinear Optimization Models 357
13.8 Minimization of Total Cost 362
13.9 Allocation of Joint Costs 365
13.10 Summary and Study Guide 366
14 FINANCIAL STATEMENTS 369
14.1 The Importance of Financial Reports of a Firm 369
14.2 Balance Sheets 370
14.3 Income Statements 375
14.4 Statements of Changes in Financial Position 377
14.5 Analysis of the Financial Position of a Firm 383
14.6 Auditors Report 387
14.7 Inflation Accounting 388
14.8 Summary and Study Guide 390
15 UNCERTAINTY AND RISK 400
15.1 Decisions under Uncertainty 400
15.2 Expected Values and Variances 401
15.3 Risk Exposures and Attitudes Toward Risk 405
15.4 Expected Value Decision Criterion 407
15.5 Decision Tree 409
15.6 Regret or Opportunity Loss 413
15.7 Value of Information for Reducing Uncertainty 415
15.8 Gambler s Indifference Map 418
viii Contents
15.9 Application of Certainty Equivalent Concept to
Multiperiod Investments 420
15.10 Operating Risk versus Financial Risk 421
15.11 Risk Measurements in Capital Markets 422
15.12 The Capital Asset Pricing Model 424
15.13 Determination of Asset Risk of a Firm 427
15.14 Estimation of Market Expected Rates of Return 430
15.15 Summary and Study Guide 432
16 CAPITAL INVESTMENT DECISIONS IN PRIVA TE
FIRMS 436
16.1 Important Factors for Consideration 436
16.2 The Cost of Capital for an Investment Project 437
16.3 The MM Model of Corporate Finance and Investment 438
16.4 Interactions of Investment and Financing Decisions 441
16.5 Selection of Appropriate Minimum Attractive Rates of
Return 445
16.6 The Internal Rate of Return as a Merit Measure 450
16.7 The Overall Rate of Return for Unconventional Cash
Flow Profiles 452
16.8 External Balances for Unconventional Cash Flow
Profiles 457
16.9 Effects of Reinvestment Policies on Project Evaluation 458
16.10 Evaluation of Mutually Exclusive Proposals Using
Distinct Reinvestment Rate 461
16.11 Summary and Study Guide 462
17 RESOURCE ALLOCA TION DECISIONS FOR
PUBLIC PROJECTS 467
17.1 Important Factors for Consideration 467
17.2 Fiscal Policy Objectives for the Public Sector 468
17.3 The Provision of Public Projects 469
17.4 Economic Efficiency and Externalities 470
17.5 Consumers Surplus 477
17.6 Social Equity and Income Distribution 479
17.7 Different Views on Social Discount Rates 480
17.8 Benefit Cost Ratio for Unconventional Cash Flows 484
17.9 Multiobjectives in the Choice of Social Discount Rates 485
17.10 The Choice of Social Discount Rates in Practice 486
17.11 Summary and Study Guide 487
Contents jx
APPENDIX A DISCRETE COMPOUND INTEREST TABLES 492
APPENDIX B BASIC FACTORS FOR CONTINUOUS
COMPOUNDING 513
APPENDIX C CONTINUOUS COMPOUND INTEREST
TABLES 515
APPENDIX D USE OF ELECTRONIC SPREADSHEETS AS
COMPUTATIONAL AIDS 521
APPENDIX E TABLE OF STANDARD NORMAL PROBABILITY
DISTRIBUTION 528
ANSWERS TO SELECTED PROBLEMS 530
INDEX 535
Contents
6 COMPARISON OF MUTUALLY EXCLUSIVE PROPOSALS 151
6.1 The Nature of Mutually Exclusive Proposals 151
6.2 Objectives and Merit Measures 152
6.3 Decision Criteria Based on Direct Merit Measures 154
6.4 Decision Criteria Based on Indirect Merit Measures 158
6.5 Relationship Between Incremental Net Present Value and
Incremental Internal Rate of Return 159
6.6 Comparison of Merit Measures 167
6.7 Decisions on the Timing of Expansion and Replacement 169
6.8 Maximum Performance at a Fixed Cost 170
6.9 Minimum Life Cycle Cost 171
6.10 Replacement Analysis 175
6.11 Optimal Economic Life of Physical Assets 176
6.12 Exogenous Factors in Equipment Replacement 181
6.13 Summary and Study Guide 183
7 THE BENEFIT COST RATIO METHOD 189
7.1 A Historical Perspective 189
7.2 The Benefit Cost Ratio 190
7.3 Independent Projects versus Mutually Exclusive Projects 194
7.4 Optimization of a Continuous Set of Alternatives 196
7.5 Incremental Analysis of Mutually Exclusive Proposals 199
7.6 Procedure for Incremental Analysis 202
7.7 Treatment of Additional Benefits or Reduced Costs 205
7.8 Ordering Alternatives on the Basis of Initial Costs 208
7.9 Summary and Study Guide 211
8 THE INTERNAL RATE OF RETURN METHOD 215
8.1 Nature and Scope of Current Usage 215
8.2 The Internal Rate of Return as a Profit Measure 218
8.3 Decision Criteria for Accepting Independent
Projects 220
8.4 Computation of Net Present Value and Its
Derivatives at Zero Discount Rate 223
8.5 The Concept of Incremental Internal Rate of Return
Analysis 225
8.6 Ordering Mutually Exclusive Alternatives for Pairwise
Comparisons 229
8.7 Decision Criteria for Selection Among Mutually
Exclusive Alternatives 234
8.8 The Application of Internal Rate of Return Method 241
8.9 Summary and Study Guide 243
|
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| indexdate | 2024-07-09T16:36:49Z |
| institution | BVB |
| isbn | 013278193X |
| language | English |
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| physical | XIII, 540 S. graph. Darst. |
| publishDate | 1992 |
| publishDateSearch | 1992 |
| publishDateSort | 1992 |
| publisher | Prentice Hall |
| record_format | marc |
| spelling | Au, Tung Verfasser aut Engineering economics for capital investment analysis Tung Au ; Thomas P. Au 2. ed. Englewood Cliffs, NJ Prentice Hall 1992 XIII, 540 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier Engineering - Finance - Management Investeringen gtt Kapitaalinvesteringen gtt Ingenieurwissenschaften Capital investments Evaluation Engineering economy Au, Thomas P. Verfasser aut HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=003704261&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Au, Tung Au, Thomas P. Engineering economics for capital investment analysis Engineering - Finance - Management Investeringen gtt Kapitaalinvesteringen gtt Ingenieurwissenschaften Capital investments Evaluation Engineering economy |
| title | Engineering economics for capital investment analysis |
| title_auth | Engineering economics for capital investment analysis |
| title_exact_search | Engineering economics for capital investment analysis |
| title_full | Engineering economics for capital investment analysis Tung Au ; Thomas P. Au |
| title_fullStr | Engineering economics for capital investment analysis Tung Au ; Thomas P. Au |
| title_full_unstemmed | Engineering economics for capital investment analysis Tung Au ; Thomas P. Au |
| title_short | Engineering economics for capital investment analysis |
| title_sort | engineering economics for capital investment analysis |
| topic | Engineering - Finance - Management Investeringen gtt Kapitaalinvesteringen gtt Ingenieurwissenschaften Capital investments Evaluation Engineering economy |
| topic_facet | Engineering - Finance - Management Investeringen Kapitaalinvesteringen Ingenieurwissenschaften Capital investments Evaluation Engineering economy |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=003704261&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
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