Economic and Financial Analysis for Engineering and Project Management

Ardalan, Abol

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 oMore about Replacement o Prior Knowledge of Replacement Time o Problems Appendix 1: Proof of the Formulae Appendix 2: Interest Tables Index