ENGINEERING ECONOMY EXAM 2 QUESTION
SET WITH RATIONALES AND INVESTMENT
APPRAISAL AND CAPITAL BUDGETING REVIEW
2026
◉ simple problems.
Answer: -do no require much time or effort
-Ex: cash or credit card? semester parking pass or use parking
meters?
◉ intermediate problems.
Answer: -primarily economic
-Ex: buy or lease? which equipment should be purchased?
◉ complex problems.
Answer: -mix of economic, political, and humanistic elements
-Ex: feasible study of a new automobile plant, planning of new
highways
◉ When is engineering economic analysis needed?.
Answer: -if the problem is important enough to justify giving it
serious thought and effort
,-requires organized analysis (can't be worked in one's head)
-has economic aspects which are important in reaching a decision
◉ What types of questions should engineering economic analysis
answer in general?.
Answer: -Which engineering projects are worthwhile?
-Which engineering projects should have higher priority?
-How should the engineering project be designed?
◉ What do engineers do?.
Answer: Apply science and math to SOLVE PROBLEMS (which
requires us to make decisions)
◉ What types of questions should engineering economic analysis
answer about personal decisions?.
Answer: -How do I achieve my long-term financial goals?
-How do I compare different ways to finance purchases?
-How do I make short- and long-term investment decisions?
◉ What is the decision-making process?.
Answer: 1. recognize problem
2. define the goal or objective
, 3. assemble relevant data
4. identify feasible alternatives
5. select the criterion to determine the best alternative
6. construct a model
7. predict the outcomes of each alternative
8. choosing the best alternative
9. audit the result
◉ 1. recognize the problem.
Answer: -decision making starts with identifying the problem
-once we know problem, we can solve it at best
◉ 2. define the goal or objective.
Answer: -goal or objective can be general or specific
◉ 3. assemble relevant data.
Answer: -assembling relevant data is important for a good decision
-data can be published and unpublished
-published data is available easily
-unpublished data may include data from knowledgeable person or
from survey
SET WITH RATIONALES AND INVESTMENT
APPRAISAL AND CAPITAL BUDGETING REVIEW
2026
◉ simple problems.
Answer: -do no require much time or effort
-Ex: cash or credit card? semester parking pass or use parking
meters?
◉ intermediate problems.
Answer: -primarily economic
-Ex: buy or lease? which equipment should be purchased?
◉ complex problems.
Answer: -mix of economic, political, and humanistic elements
-Ex: feasible study of a new automobile plant, planning of new
highways
◉ When is engineering economic analysis needed?.
Answer: -if the problem is important enough to justify giving it
serious thought and effort
,-requires organized analysis (can't be worked in one's head)
-has economic aspects which are important in reaching a decision
◉ What types of questions should engineering economic analysis
answer in general?.
Answer: -Which engineering projects are worthwhile?
-Which engineering projects should have higher priority?
-How should the engineering project be designed?
◉ What do engineers do?.
Answer: Apply science and math to SOLVE PROBLEMS (which
requires us to make decisions)
◉ What types of questions should engineering economic analysis
answer about personal decisions?.
Answer: -How do I achieve my long-term financial goals?
-How do I compare different ways to finance purchases?
-How do I make short- and long-term investment decisions?
◉ What is the decision-making process?.
Answer: 1. recognize problem
2. define the goal or objective
, 3. assemble relevant data
4. identify feasible alternatives
5. select the criterion to determine the best alternative
6. construct a model
7. predict the outcomes of each alternative
8. choosing the best alternative
9. audit the result
◉ 1. recognize the problem.
Answer: -decision making starts with identifying the problem
-once we know problem, we can solve it at best
◉ 2. define the goal or objective.
Answer: -goal or objective can be general or specific
◉ 3. assemble relevant data.
Answer: -assembling relevant data is important for a good decision
-data can be published and unpublished
-published data is available easily
-unpublished data may include data from knowledgeable person or
from survey
