Engineering Economic Analysis

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After Completing This Chapter...

The student should be able to:

.Evaluate project cash flows using theinternal rate of return(IRR) methodology.

.Plot a project's present worth (PW) against the interest rate.

.Use anincrementalrate of return analysis to evaluate competing alternat:ives.

. Develop and use spreadsheets to make IRR and incremental rate of ret~ calculatio~

.QUESTIONSTO CONSIDER

1. Imagine that you are a manufacturer who is considering using RFID chips to track Y01
   products. What cost and benefit factors would you consider in deciding w.hetherto embe
   chips in your pr9ducts, and how much to invest in the necessary techD.ology?


2. Now assume that you are a retailer who is also considering the RFID technology.Ho'
   would your cost and benefit considerations differ from those of a product manufacture}
   What specific factors would you consider? What if the manufacturers you buy producl
   from have already adopted the technology? How would this affect your decision?


3. Since October 2000, the U.S. military has been using RFID technology in its Joint Tou
   Asset Visibility(ITAV) program, which tracks equipmentand supplies.ITAV has reduce.
   duplicate orders, helped speed up troop deployment, and allowed mi~tary planners to
   accomplish missions with fewer ships, planes, and ground vehicles. How is the ITA'
   program likely to affect the pace ofRFID's adoption by priva~ industry?


4. Some consumers have already expressed concern about RFID chips, calling them aJ
   invasion of privacy.What ethical and social concerns are raised by RFID chips?


5. In response to consumer worries, RFID chip manufacturers are developing "kill" tech
   nologies that can allow consumers to disable RFID chips after they havepurchasedgood:
   containing these miniature tracking devices. How might this affect consumer attitudes',

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