Engineering Economics Concept 5

Question 1

Rate of return

Answer 1

i* - Compound interest rate on unpaid or unrecovered balances such that the final amount results in a zero balance (7.1).

Question 2

Recovery period

Answer 2

n - Number of years to completely depreciate an asset (16.1).

Question 3

Salvage value

Answer 3

S - Expected trade-in or market value when an asset is traded or disposed of (16.1).

Question 4

Standard deviation

Answer 4

s or σ - Measure of dispersion or spread about the expected value or average (19.4).

Question 5

Taxable income

Answer 5

TI - Amount upon which income taxes are based (17.1).

Question 6

Tax rate

Answer 6

T - Decimal rate, usually graduated, used to calculate corporate or individual taxes (17.1).

Question 7

Time

Answer 7

t - Indicator for a time period (1.7).

Question 8

Time value of money (TVM)

Answer 8

The concept of a dollar today being worth more than a dollar tomorrow.

Question 9

Uniform series

Answer 9

is a cash flow series in which the same amount of money (annuity) is paid or received in two or more sequential periods. Also called an annuity or equal-payment series.

Question 10

Value added

Answer 10

EVA - Economic value added reflects net profit after taxes (NPAT) after removing cost of invested capital during the year (17.8).