Engineering Econ Concepts 1

Question 1

Annual amount or worth

Answer 1

A or AW - Equivalent uniform annual worth of all cash inflows and outflows over estimated life (1.7, 6.1).

Question 2

Annual operating cost

Answer 2

AOC - Estimated annual costs to maintain and support an alternative (1.3).

Question 2

Benefit/cost ratio

Answer 2

B/C - Ratio of a project’s benefits to costs expressed in PW, AW, or FW terms (9.2).

Question 3

Breakeven point

Answer 3

QBE - Quantity at which revenues and costs are equal, or two alternatives are equivalent (13.1).

Question 4

Book value

Answer 4

BV - Remaining capital investment in an asset after depreciation is accounted for (16.1).

Question 5

Capital budget

Answer 5

b - Amount of money available for capital investment projects (12.1).

Question 6

Capital recovery

Answer 6

CR or A - Equivalent annual cost of owning an asset plus the required return on the initial investment (6.2).

Question 7

Capitalized cost

Answer 7

CC or P - Present worth of an alternative that will last forever (or a long time) (5.5).

Question 8

Cash flow

Answer 8

CF - Actual cash amounts which are receipts (inflow) and disbursements (outflow) (1.10).

Question 9

Cash flow diagram

Answer 9

A diagram showing the timing and value of cash inflows and outflows, as viewed from one party’s perspective.

Question 10

Cash flow before or after taxes

Answer 10

CFBT or CFAT - Cash flow amount before relevant taxes or after taxes are applied (17.2).

Question 11

Composite rate of return

Answer 11

i’ - Unique rate of return when a reinvestment rate c is applied to a multiple-rate cash flow series (7.5).