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Measurement of Benefits and Costs
Direct losses are measured or estimated statistically or by a priori judgment. Actuarial fire-loss data…
Posted inEngineering Economics
Identification of Relevant Benefits and Costs
The identification of benefits and costs depends on the particular project under consideration. Thus, in…
Posted inEngineering Economics
Benefit-Cost Analysis
Benefit-cost analysis, also referred to as cost-benefit analysis, is a method of comparison in which…
Posted inEngineering Economics
Rate of Return
Rate of return is, by definition, the interest rate at which the present worth of…
Posted inEngineering Economics
Annual Cost
To compare alternatives by annual cost, all cash flows are changed to a series of…
Posted inEngineering Economics
Present Worth
In a present worth comparison of alternatives, the costs associated with each alternative investment are all converted…
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Inflation and the discount rate
Provision for inflationmay be made in two ways: (1) estimate all future costs and benefits…
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Discount Rate
The term discount rate is often used for the interest rate when comparing alternative projects or strategies.…
Posted inEngineering Economics
Comparison of Alternatives
Most decisions are based on economic criteria. In-vestments are unattractive, unless it seems likely they…
Posted inEngineering Economics
Other Interest Calculation Concepts
Additional concepts involved in interest calculations include continuous cash flow, capitalized costs, begin-ning of period payments,…