Engineering Economic Analysis

INDEX 595

neitherinput nor output fixed, 12-13, 146, 182
fixed benefit-cost ratio, 274
Economic decision trees', 316-22
Economic decision-making for current costs, 15-18
Effective interest rate, 109
End-of-year convention, 144
Engineering economic analysis: assumptions, 144-46
borrowed money viewpoint, 145
choosing a method, 261-62
identifying and rejecting unattractive alternatives,
520-21
ignoring inflation, 448
incorporating inflation, 448
price indexes, 456
role of, 5-6
viewpoint, 145
Equity, 543
Equivalence, 68-73
c:I '~nds on interest rate, 71-73
Estk...dted data, 304-6
range,306-8
Estimating: accuracy, 39
by analogy, 40
benefits, 50
cost indexes, 44-45
costs, 3~9
detailed, 39
difficulties, 39-40
learning curve, 47-49
per-unit model, 41
power-sizing model, 45-46
rough, 38
segmenting model, 43
semidetailed, 38-39
triangulation, 47
3xchange rates,440-41
3xpected value, 313
3xpl'.J'I!;edversus depreciated, 339
3xtl aarket consequences, 10, 14

Financial ratios from: balance sheet, 543-44

income statement, 546

Fixed cost, 28

Functional notation, 74

Future worth analysis, 272-73

G

Geometric gradient, 105-8

Geometric series present worth factor, 108

I

~actor: arithmetic gradient present

worth, 100

arithmetic gradient uniform series, 100

geometric series present worth, 108

notation, 74

relationships between, 97-98

single payment compound amount, 74

single payment present worth, 76

uniform series capital recovery, 89

uniform series compound amount, 87

uniform series present worth, 90

uniform series sinking fund, 88

Income statement, 544-47

links with balance sheet, 546-47

Incremental analysis, 246-63

benefi~costratio,498-504

graphical, 246-52

multiple alternatives, 250

spreadsheets, 262-63

unlimited alternatives, 258-59

Incremental cost, 34-35

Incremental rate of return, 212-18, 252-58

Indirect cost, 8, 548

Induectcostallocation,548-49

Individual income tax: capital gains and

losses, 384

itemized deductions, 373

personal exemption, 373

rates, 375-76

standard deduction, 373

taxable income, 372-73

Infinite analysis period, 154-57

Inflation: actual dollars, 443

after-tax calculations, 460-62

cash flows at different rates, 456-58

causes, 440-41

composite versus commodity indexes, 453-55

constant dollars versus then-current

dollars, 448-50

consumer price index, 454-55

cost of borrowed money, 481-82

definition, 440

deflation, 145-46

different rates per period, 458-59

engineering economic analysis ignoring, 448

engineering economic analysis including, 448

indexes, 450-56

producer price index, 454

rate, 441-42

real and market interest rates, 441-42

real dollars, 444

spreadsheets, 462-64

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