Capital Investment Analysis for Engineering and Management

This book is intended primarily for graduate or advanced undergraduate study for students in engineering and business disciplines emphasizing capital investment decision methodologies. The scope and coverage of the book also make it suitable as a text and a reference in industry. This book is an evolution ofIntermediate Economic Analysis for Management and Engineeringby John R. Canada, published by Prentice-Hall in 1971. That was revised with the capable coauthorship of John A. White and renamedCapital Investment Decision Analysis for Management and Engineering,published in 1980. The Second Edition, slightly renamed and published in 1996, incorporated the primary creative coauthorship talents of William G. Sullivan. This Third Edition benefits from the active coauthorship of all three of the preceding authors and is considerably enhanced by the addition of Dennis J. Kulonda, who provided accounting, finance, and managerial perspectives to broaden the usefulness of the book, particularly in the Engineering Management field. It continues as a text and reference that is more concise and yet more advanced than traditional applied works and is highly lucid--incorporating abundant example problems and solutions. Part One places capital investment decisions within a systems analysis framework. Chapters 1-3 provide fundamental concepts and techniques important in accounting, cost measurement, and estimating. Extensive supplemental glossaries are provided in an Instructor's Manual. Part Two begins with a rather succinct summary of basic time value-based evaluation techniques in Chapters 4-6. Chapter 7 covers currently important depreciation methodologies and federal income tax law provisions, with numerous examples of ways to make after-tax comparisons of alternatives. Chapter 8 shows how to consider inflation explicitly, if needed, and Chapter 9 addresses replacement analyses in moderate depth. Chapter 10 is all-new material on new product and expansion analyses. Chapter 11 summarizes capital budgeting management perspectives and includes appendices on adjusted present worth or value and bundled financing. Part Three remains a solid treatment of formal approaches to evaluation of risk and uncertainty in capital investment analyses. Its Chapters 12-16 contain minimal modifications to such topics as risk, sensitivity, and decision tree analysis. Part Four includes new material and specialized topics. Chapter 17 on real options analysis is based on an outstandingHarvard Business Reviewarticle by Timothy A. Luehrman. Chapter 18 contains considerably enhanced materials on activity-based costing and management. Finally, Chapter 19 provides a good overview of multiattribute decision techniques, with heavy emphasis on use of the analytic hierarchy process. For Parts One and Two, no specialized mathematics are required; while, for much of Part Three, it is assumed that the student understands the basic analysis procedures of Part Two and has a fair knowledge of elementary probability and statistics. Some probability concepts are explained in the text, but those who need further background will find that the first half of most probability and statistics texts will provide adequate reference material. Complete understanding of the application of some specialized quantitative techniques to capital investment analyses involving probabilities will be facilitated by prior exposure to the theory underlining those techniques. For a course in economic evaluation of alternative projects at the advanced undergraduate or initial graduate level, Parts One and Two can-be used for a broad overview as well as principles/techniques orientation and review purposes. Parts Three and Four provide the primary material not normally included in a first course. Throughout, ample student problem exercises are included, and even more comprehensive problems and cases are suggested in the InstructorCanada, John R. is the author of 'Capital Investment Analysis for Engineering and Management', published 2004 under ISBN 9780131434080 and ISBN 013143408X.