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## Chapter 1 :Foundations of Engineering Economy

Introduction:

This chapter provides you with an understanding of the basic concepts and terminology necessary to perform an engineering economy analysis. it explains the role of engineering economy in the decision _making process and describes the major elements of an engineering economy study.Finally, a basic graphical approach_the cash-flow diagram_is introduced.

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## Chapter 2 :Factors and their use

Introduction:

In this chapter we learn the derivation of the engineering economy factors and the use of these basic factors in concepts presented here are relied upon through_out the text.

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## Chapter 3 :Nominal & Effective Interest Rates.

Introduction:

Objectives:

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## Chapter 4 :Use of multiple factors

Introduction:

Because many of the cash-flow situations encountered in real-world engineering problems do not fit exactly the cash-flow sequences for which the equations in chapter2 were developed,it is common to combine the equations.for a given sequence of cash flows, there are usually many ways to determine the equivalent present worth, future -worth,or annual -worth cash flows.In this chapter ,you will learn how to combine several of the engineering economy factors in order to address these more complex situations.

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## Chapter 5 :present worth and capitalized-cost evaluation.

Introduction:

A future amount of money converted to its equivalent value now has a present worth (PW) that is always less than that of the actual cash flow, because for any interest rate greater than zero, all P/F factors have a value less than 1.0. For this reason, present worth values are often referred to as discounted cash flows (DCF). Similarly, the interest rate is referred to as the discount rate. Besides PW, two other terms frequently used are present value (PV) and net present value (NPV). Up to this point, present worth computations have been made for one project or alternative. In this chapter, techniques for comparing two or more mutually exclusive alternatives by the present worth method are treatedSeveral extensions to PW analysis are covered here—future worth, capitalized cost, payback period, life-cycle costing, and bond analysis—these all use present worth relations to analyze alternatives. In order to understand how to organize an economic analysis, this chapter begins with a description of independent and mutually exclusive projects, as well as revenue and service alternatives. The case study examines the payback period and sensitivity for a public sector project.

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## Chapter 6 :Annual worth analysis

Introduction:

The objectives of this chapter are to explain and demonstrate the primary methods of calculating the equivalent uniform annual worth of an asset and how to select the better of two alternatives on the basis of an annual-worth comparison.Although the word annual is included in the name of the method ,the procedures developed in this chapter can be used to find an equivalent uniform series over any interest period desired,as per chapter 3 .Additionally ,the word cost is often used interchangeably with worth in describing a series so that annual cost and AW mean the same thing.However,AW more properly describes the cash flow because oftentimes the uniform series developed represents an income rather than a cost .

Objectives:

5. ###### Select the best alternative.
6. Calculate the AW of a Perpetual investment involving a perpetual uniform series

## Chapter 7 :Rate of return for one project

Introduction:

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## Chapter 8 :ROR Analysis for Multiple Alternatives.

Introduction:

This chapter presents the methods by which two or more alternatives can be evaluated using a rate of return comparison. The ROR evaluation correctly performed will result in the same selection as the PW and AW analysis, but the computational procedure is considerably different for ROR evaluations

Objectives:

5. ###### Select the better of two alternatives using an ROR relation based on annual worth.
6. Select the best of multiple alternatives using the ROR method.

## Chapter 9 :Benefit & Cost Analysis

Introduction:

This chapter explain the evaluation and comparison of alternatives on the basis of the benefit/cost ratio. Though this method is sometimes regarded as supplementary, since it is commonly used in conjunction with a present-worth or annual worth analysis,it is an analytical technique we must all understand.Besides its use in business and industry, the B/C method is utilized on many government and public works projects to determine if it is expected benefits provide an acceptable return on the estimated investment and costs.

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## Chapter 10 :Tariff

Introduction:

The electrical energy produced by a power station is delivered to a large number of consumers. The tariff is the rate at which electrical energy is sold naturally becomes attention inviting for electric supply company. Tariff – The rate at which electrical energy is supplied to a consumer is known as tariff. Although tariff should include the total cost of producing and supplying electrical energy plus the profit, yet it cannot be the same for all types of consumers.

Objectives:

1. ###### Destinguish between different type of tariff
• Single tariff.
• Flat rate tariff.
• Block rate tariff.
• Two part tariff.
• Power factor tariff.
• Three part tariff.
2. Solve examples about different type of tariff.

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## Chapter 12 :Sensitivity Analysis and expected value decision.

Introduction:

Sensitivity analysis, itself a study usually performed in conjunction with the engineering economy study, determines how a measure of worth – Pw, Aw, ROR or B/C and the alternative selected will be altered if a particular factor or parameter varies over a stated range of values.

Plotting the sensitivity of PW, AW or ROR versus the parameter studied is very helpful. Two alternatives can be compared with respect to a given parameter and the breakeven point computed. This is the value at which the two alternatives are economically equivalent.

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