SOLUTION MANUAL FOR ENGINEERING ECONOMIC
ANALYSIS 9TH EDITION BY DONALD G. NEWNAN , JEROME
P. LAVELLE , TED ESCHENBACH BEST EDITION AVAILABLE
A+
SOLUTION MANUAL 9 TH
EDITION
,TABLE OF CONTENTS
Learning Stage 1 - The Fundamentals
1) Foundations of Engineering Economy
2) Factors: How Time and Interest Affect Money
3) Combining Factors and Spreadsheet Functions
4) Nominal and Effective Interest Rates
Learning Stage 2 - Basic Analysis Tools
5) Analysis Using Present Worth and Future Worth Values
6) Annual Worth Analysis
7) Rate of Return Analysis: One Project
8) Rate of Return Analysis: Multiple Alternatives
9) Benefit/Cost Analysis and Public Sector Economics
Learning Stage 2 - Epilogue: Selecting the Basic Analysis
Tool
Learning Stage 3 - Making Decisions
10) Project Financing and Noneconomic Attributes
11) Replacement and Retention Decisions
12) Independent Projects with Budget Limitation
13) Breakeven and Payback Analysis
Learning Stage 4 - Rounding Out the Study
14) Effects of Inflation
15) Cost Estimation and Indirect Cost Allocation
16) Depreciation and Depletion Methods
17) After-Tax Economic Analysis
18) Sensitivity Analysis and Staged Decisions
19) Decision Making under Risk
, Chapter 1: Making Economic Decisions
1- 1
A Survey Of Students Answering This Question Indicated That They Thought About 40% Of Their
Decisions Were Conscious Decisions.
1- 2
The Choice Of An Engine Has Important Money Consequences So Would Be
(a) Yes.
Suitable For Engineering Economic Analysis.
Important Economic- And Social- Consequences. Some Might Argue The
(b) Yes.
Social Consequences Are More Important Than The Economics.
Probably There Are A Variety Of Considerations Much More Important Than
(c) ?
The Economics.
(d) No. Picking A Career On An Economic Basis Sounds Terrible.
(e) No. Picking A Wife On An Economic Basis Sounds Even Worse.
1- 3
Of The Three Alternatives, The $150,000 Investment Problem Is Most Suitable For Economic Analysis.
There Is Not Enough Data To Figure Out How To Proceed, But If The ‗Desirable Interest Rate' Were 9%,
Then Foregoing It For One Week Would Mean A Loss Of:
1
/52 (0.09) = 0.0017 = 0.17%
Immediately. It Would Take Over A Year At 0.15% More To Equal The 0.17% Foregone Now.
The Chocolate Bar Problem Is Suitable For Economic Analysis. Compared To The Investment Problem It
Is, Of Course, Trivial.
Joe's Problem Is A Real Problem With Serious Economic Consequences. The Difficulty May Be In
Figuring Out What One Gains If He Pays For The Fender Damage, Instead Of Having The Insurance
Company Pay For It.
1- 4
Gambling, The Stock Market, Drilling For Oil, Hunting For Buried Treasure—There Are Sure To Be A
Lot Of Interesting Answers. Note That If You Could Double Your Money Every Day, Then:
2x ($300) = $1,000,000
And X Is Less Than 12 Days.
, 1- 5
Maybe Their Stock Market ‗Systems' Don't Work!
1- 6
It May Look Simple To The Owner Because He Is Not The One Losing A Job. For The Three
Machinists It Represents A Major Event With Major Consequences.
1- 7
For Most High School Seniors There Probably Are Only A Limited Number Of Colleges And
Universities That Are Feasible Alternatives. Nevertheless, It Is Still A Complex Problem.
1- 8
It Really Is Not An Economic Problem Solely — It Is A Complex Problem.
1- 9
Since It Takes Time And Effort To Go To The Bookstore, The Minimum Number Of Pads Might Be
Related To The Smallest Saving Worth Bothering About. The Maximum Number Of Pads Might
Be The Quantity Needed Over A Reasonable Period Of Time, Like The Rest Of The Academic
Year.
1- 10
While There Might Be A Lot Of Disagreement On The ‗Correct' Answer, Only Automobile
Insurance Represents A Substantial Amount Of Money And A Situation Where Money Might Be The
Primary Basis For Choosing Between Alternatives.
1- 11
The Overall Problems Are All Complex. The Student Will Have A Hard Time Coming Up With
Examples That Are Truly Simple Or Intermediate Until He/She Breaks Them Into Smaller And
Smaller Sub-Problems.
1- 12
These Questions Will Create Disagreement. None Of The Situations Represents Rational
Decision-Making.
Choosing The Same Career As A Friend Might Be OK, But It Doesn't Seem Too Rational.
Jill Didn't Consider All The Alternatives.
Don Thought He Was Minimizing Cost, But It Didn't Work. Maybe Rational Decision-Making
Says One Should Buy Better Tools That Will Last.
ANALYSIS 9TH EDITION BY DONALD G. NEWNAN , JEROME
P. LAVELLE , TED ESCHENBACH BEST EDITION AVAILABLE
A+
SOLUTION MANUAL 9 TH
EDITION
,TABLE OF CONTENTS
Learning Stage 1 - The Fundamentals
1) Foundations of Engineering Economy
2) Factors: How Time and Interest Affect Money
3) Combining Factors and Spreadsheet Functions
4) Nominal and Effective Interest Rates
Learning Stage 2 - Basic Analysis Tools
5) Analysis Using Present Worth and Future Worth Values
6) Annual Worth Analysis
7) Rate of Return Analysis: One Project
8) Rate of Return Analysis: Multiple Alternatives
9) Benefit/Cost Analysis and Public Sector Economics
Learning Stage 2 - Epilogue: Selecting the Basic Analysis
Tool
Learning Stage 3 - Making Decisions
10) Project Financing and Noneconomic Attributes
11) Replacement and Retention Decisions
12) Independent Projects with Budget Limitation
13) Breakeven and Payback Analysis
Learning Stage 4 - Rounding Out the Study
14) Effects of Inflation
15) Cost Estimation and Indirect Cost Allocation
16) Depreciation and Depletion Methods
17) After-Tax Economic Analysis
18) Sensitivity Analysis and Staged Decisions
19) Decision Making under Risk
, Chapter 1: Making Economic Decisions
1- 1
A Survey Of Students Answering This Question Indicated That They Thought About 40% Of Their
Decisions Were Conscious Decisions.
1- 2
The Choice Of An Engine Has Important Money Consequences So Would Be
(a) Yes.
Suitable For Engineering Economic Analysis.
Important Economic- And Social- Consequences. Some Might Argue The
(b) Yes.
Social Consequences Are More Important Than The Economics.
Probably There Are A Variety Of Considerations Much More Important Than
(c) ?
The Economics.
(d) No. Picking A Career On An Economic Basis Sounds Terrible.
(e) No. Picking A Wife On An Economic Basis Sounds Even Worse.
1- 3
Of The Three Alternatives, The $150,000 Investment Problem Is Most Suitable For Economic Analysis.
There Is Not Enough Data To Figure Out How To Proceed, But If The ‗Desirable Interest Rate' Were 9%,
Then Foregoing It For One Week Would Mean A Loss Of:
1
/52 (0.09) = 0.0017 = 0.17%
Immediately. It Would Take Over A Year At 0.15% More To Equal The 0.17% Foregone Now.
The Chocolate Bar Problem Is Suitable For Economic Analysis. Compared To The Investment Problem It
Is, Of Course, Trivial.
Joe's Problem Is A Real Problem With Serious Economic Consequences. The Difficulty May Be In
Figuring Out What One Gains If He Pays For The Fender Damage, Instead Of Having The Insurance
Company Pay For It.
1- 4
Gambling, The Stock Market, Drilling For Oil, Hunting For Buried Treasure—There Are Sure To Be A
Lot Of Interesting Answers. Note That If You Could Double Your Money Every Day, Then:
2x ($300) = $1,000,000
And X Is Less Than 12 Days.
, 1- 5
Maybe Their Stock Market ‗Systems' Don't Work!
1- 6
It May Look Simple To The Owner Because He Is Not The One Losing A Job. For The Three
Machinists It Represents A Major Event With Major Consequences.
1- 7
For Most High School Seniors There Probably Are Only A Limited Number Of Colleges And
Universities That Are Feasible Alternatives. Nevertheless, It Is Still A Complex Problem.
1- 8
It Really Is Not An Economic Problem Solely — It Is A Complex Problem.
1- 9
Since It Takes Time And Effort To Go To The Bookstore, The Minimum Number Of Pads Might Be
Related To The Smallest Saving Worth Bothering About. The Maximum Number Of Pads Might
Be The Quantity Needed Over A Reasonable Period Of Time, Like The Rest Of The Academic
Year.
1- 10
While There Might Be A Lot Of Disagreement On The ‗Correct' Answer, Only Automobile
Insurance Represents A Substantial Amount Of Money And A Situation Where Money Might Be The
Primary Basis For Choosing Between Alternatives.
1- 11
The Overall Problems Are All Complex. The Student Will Have A Hard Time Coming Up With
Examples That Are Truly Simple Or Intermediate Until He/She Breaks Them Into Smaller And
Smaller Sub-Problems.
1- 12
These Questions Will Create Disagreement. None Of The Situations Represents Rational
Decision-Making.
Choosing The Same Career As A Friend Might Be OK, But It Doesn't Seem Too Rational.
Jill Didn't Consider All The Alternatives.
Don Thought He Was Minimizing Cost, But It Didn't Work. Maybe Rational Decision-Making
Says One Should Buy Better Tools That Will Last.
