After Completing This Chapter...
The student should be able to:.
.Use future worth, benefit-cost ratio, payback period, and sensitivity analysis methods.
to solve engineering economy problems..
.Link the use of thefuture worthanalysis to the present worth and annual worth methods
developed earlier..
.Mathematically develop thebenefit-cost ratio,and use thistnodel to select alternatives
and make economic choices.
.Understand the concept of thepayback periodof an investment, and be able t~ calculate
this quantity for prospectiveprojects.
.Demonstrate a basic level understanding ofsensitivityandbreakeven analysesand the
use of these tools in an engineering economic analysis.
.Use a spreadsheet to perform sensitivity andbreakeven analyses.
QUESTIONS TO CONSIDER )
- Officeleases frequently require building owners, rather than tenants, to pay heating and
cooling costs. What effect might this have on the decision making of potential tenants
for green buildings?' - The green building movement has had more success among developers who hold onto
their buildings for years and rent them out, rather than selling them as soon as they are
constructed. What factors might influence their views?
3.Manyenvironmentallyfriendlybuildings are architecturallydistinctiveand featurebetter
quality materials and workmanshipthan traditional commercial structures.Environmen-
tal advocateshope these characteristicswill help greenbuiJ,.dingsattracta rent "premium."
How might these features make the buildings more attractive to tenants?