# Economic and Financial Analysis for Engineering and Project Management

## 1st Edition

CRC Press

221 pages

Hardback: 9781566768320
pub: 1999-10-13
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pub: 1999-10-13
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### Description

Economic and Financial Analysis for Engineering and Project Management is for engineers and others who must analyze the financial and economic ramifications of producing and sustaining capital projects. Unlike other books in the field, it offers straightforward and lucid explanations of all main formulas needed to carry out financial analyses. The math is kept simple and is fully explained, making the book accessible to non-technical personnel. Numerous sample problems are provided, and can be worked on standard spreadsheet programs, as well as using interest rate tables. The book shows how to link quantitative data to management decisions and to standard reporting forms and has been designed for practicing engineers and students alike.

Economic and Financial Analysis for Engineering and Project Management is a "must have" for graduate students in engineering management departments; graduate and undergraduates taking courses in project management, engineering economics, and engineering finance. Practicing engineers will find this book THE handy reference for any project involving financial analyses.

Part 1: Financial Analysis & Choice of Alternatives

Chapter 1: Introduction

Cost and Benefits o Importance of Time (Time Value of Money) o Interest Rate o Continuous Compounding of Interest o Effective Rate of Interest o Nominal Interest Rate o Equivalence o Cash Flow Diagram o Importance of Cash Flow Diagram o The Process of Decision Making o Financial Analysis Methods o Derivation of Formulae: Problems

Chapter 2: Present Worth

Present Value (PV) o Net Present Worth o Present Value of Uniform Annual Series o Present Value of Series with Arithmetic Gradient o Multiple Alternatives and Equalizing Lives o Exclusivity: Problems

Chapter 3: Future Worth

Future Value (FV) o Future Value of Uniform Annual Series o Multiple Alternatives o Problems

Chapter 4: Annual Worth

Annual Worth & Equivalent Uniform Annual Worth o Important Point o EUAW Spreadsheet o Annual Worth of Arithmetic Gradiant Series o Problems

Chapter 5: Rate of Return

Rate of Return o Multiple Alternatives and Incremental Analysis o Multiple Rate of Returns o Problems

Chapter 6: Benefit-Cost Ratio Analysis

Benefit Cost Ratio o Equalizing Lives and Incremental Analysis o Payback o Multiple Alternatives: Problems

Chapter 7: Inflation and Its Effect on Financial Analysis

Inflation and Purchasing Power o Inflation and Interest Rate Combined o Inflation Adjusted Discount Rate: Deflation o General Inflation Indices o Problems

Chapter 8: Tax and Depreciation

Effects of Income Tax o Depreciation, Book Value, and Capital Gain o Straight Line Depreciation o Double Declining Balance Depreciation (DDB) o Modified Accelerated Cost Recovery System Depreciation o Sum of the Years Digit Depreciation (SOYD) o Change of Depreciation Method o Amortization and Depletion o Financial Analysis with Tax and Depreciation o A Comprehensive Example o Problems

Chapter 9: General Comments on Financial Analysis and Problem Solving

Applicability of Different Methods o Financial Structure of an Investment o General Structure of Problems o Extra Problems

Part 2: Life-Cycle Worth (LCW)

Chapter 10: Background and Definitions

Background o Life o System Life o Physical Life o Technological Life o Economic Life o Life of Interest and Planning Horizon o Phases of the Life-Time o Phase 1-Concept Formation o Phase 2-Conceptual Design & Development o Phase 3- Design/Engineering, Prototyping & Test o Phase 4-Manufacturing, Test, Packaging and Delivery o Phase 5-Installation, Operation, and Maintenance o Phase 6-Removal, Salvage, or Resale o Concurrent Engineering o Problems

Chapter 11: Life-Time Estimation and Calculation

Life-Time Cash Flow Diagram o Work Breakdown & Cost Breakdown Structure (CBS) o Life-Time Worth Calculation o Generic WBS o·Life-Time Cost Estimation o Parametric Estimation o Comparative Estimation o Engineering Estimation o Combination of the Estimating Methods o Estimation Accuracy o Universal Ratios o Problems

Chapter 12: Software Systems Development and Estimations

Introduction o Software Development Process o Requirements Analysis o Preliminary Design o Detailed Design o Implementation o System Test and Acceptance o Software Estimation o Anion-Ardalan Estimation Curve

Part 3: Replacement and Retirement

Chapter 13: Introduction and Definitions

Introduction o Retirement o Opportunity Cost o Replacement o Problems

Chapter 14

Replacement Decision Making o Replacement Philosophy o Economic Life and Continuous Replacement o Computerized Determination of the Economic Life o Depreciation & Tax Effects on Replacement o·Replacement Process o

• More about Replacement o Prior Knowledge of Replacement Time o Problems

Appendix 1: Proof of the Formulae

Appendix 2: Interest Tables

Index