Accounting And Finance

An Integrated Approach to Project Management,
Accounting and Finance and engine room Economics

3. Engineering Economic Analysis

3.1Introduction

The design of a system represents a decision about how resources will be transformed to get hold of a given set of objectives.

The final design is selected from among otherwise combinations that would accomplish the same objectives but sometimes with different terms performance consequences.

set per dollar invested tends to dominate the final plectron of a system.

The selection of the best configuration is determined by company the costs and relative values associated with severally alternative.

For more(prenominal) complex systems, political or other values whitethorn be more important than costs.

3.1Economic Evaluation

The purpose of an scotch evaluation is to determine whether any ascertain or investing is financially desirable.

Specifically, an evaluation addresses two types of questions:

▪ Is any individual project worthwhile? That is, does it meet our minimum standards (MARR)
▪ Given a appoint of desirable projects, rank the projects and or create the best profiles.





dissimilar financial criteria for project evaluation

Payback period
NPV
Profitability Index
IRR

2. Time Value of Money

Money has a time value. A dollar straightway is not the same dollar a year from now.

The cash represents the same nominal quantity, to be sure but a dollar later does not have the usefulness or buying power that it has today.

For purposes of definition, two amounts of money or a series of monies at different points in time are said to be equivalent when they are equal to each other at a given point in time for a given interest rate.

The mathematical consanguinity depends on only two parameters: The duration, or “life” of the project. C and the discount rate, c.

3. Discount...If you want to get a full essay, night club it on our website: Orderessay



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