Engineering Economics Concept 4

Question 1

Measure of worth

Answer 1

Varies - Value, such as PW,AW, i*, used to judge economic viability (1.2).

Question 2

Minimum attractive rate of return

Answer 2

MARR - Minimum value of the rate of return for an alternative to be financially viable (1.9, 10.2).

Question 3

Net cash flow

Answer 3

NCF - Resulting, actual amount of cash that flows in or out during a time period (1.10).

Question 4

Net present value

Answer 4

NPV - Another name for the present worth, PW.

Question 5

Nominal value

Answer 5

The numerical value of a piece of currency (e.g. $20.00 for a twenty-dollar bill).

Question 6

Period (N)

Answer 6

Length of time a series of cash flows covers.

Question 7

Payback period

Answer 7

np - Number of years to recover the initial investment and a stated rate of return (5.6).

Question 8

Present amount or worth

Answer 8

P or PW - Amount of money at the current time or a time denoted as present (1.7, 5.1).

Question 9

Probability distribution

Answer 9

P(X) - Distribution of probability over different values of a variable (19.2).

Question 10

Principal

Answer 10

The amount of money lent/borrowed.

Question 11

Purchasing power

Answer 11

A measure of the quantity of goods and services that can be purchased with a unit of currency.

Question 12

Random variable

Answer 12

X - Parameter or characteristic that can take on any one of several values; discrete and continuous (19.2).