Textbook

Engineering Economic Analysis — A Handbook of Modern Engineering Economic Analysis is the course handbook developed for ISE 307. All chapters and appendices are available below, along with the front matter (title pages, contents, and preface).

Draft edition These chapters are a working draft. The material is complete and was used in Term 253, but it is still being revised — you may find typos or rough edges. Corrections and suggestions are welcome by email.

Part I - Foundations of Economic Decision-Making

• 1 Engineering Economic Decisions PDF
• 2 The Time Value of Money PDF
• 3 Money Management: Nominal and Effective Rates, Loans, and Financing PDF
• 4 Inflation and Purchasing Power PDF

Part II - Evaluating Alternatives

• 5 Present-Worth Analysis PDF
• 6 Annual-Equivalence Analysis PDF
• 7 Rate-of-Return Analysis PDF
• 8 Benefit-Cost Analysis and Public Projects PDF

Part III - Building Real Cash Flows

• 9 Estimating Costs: From Engineering Data to Numbers PDF
• 10 Depreciation and Income Taxes PDF
• 11 Developing Project Cash Flows PDF

Part IV - Risk and Flexibility

• 12 Handling Project Uncertainty PDF
• 13 Sequential Decisions: Trees and the Value of Information PDF
• 14 Monte Carlo Risk Simulation PDF
• 15 Real Options: The Value of Flexibility PDF

Part V - Assets over Their Lives

• 16 Replacement Decisions PDF
• 17 Sustainability Economics: Carbon, Life-Cycle Cost, and the Circular Economy PDF

Part VI - Decision Quality in Practice

• 18 Beyond Money: Multi-Criteria Decision Analysis PDF
• 19 The Economics of Automation and AI PDF
• 20 Why Good Analyses Go Wrong: Behavioral Pitfalls and Forecasting PDF
• 21 Software and Tools PDF

Appendices

• A Formula Sheet PDF
• B Interest Factor Tables PDF
• C Reading Financial Statements PDF
• D Glossary PDF

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