Switch content of the page by the Role togglethe content would be changed according to the role

# Engineering Economy, 18th edition

Published by Pearson (September 23, 2024) © 2025

**William G. Sullivan**Virginia Polytechnic Institute and State University**Elin M Wicks**Rutgers University**Joseph H. Wilck**Bucknell University

/moper month

-month term,Buy nowOpens in a new tab

Instant access

**Access details**

- Instant access once purchased
- Pay by the month or upfront. Minimum 4-month subscription
- Anytime, anywhere learning with the Pearson+ app
- 14-day refund guarantee

**Features**

- Search, highlight and take notes
- Listen as you read with audio
- Watch embedded videos with select titles
- Easily create flashcards
- Access to partners and offers

**Details**

- A print text you can rent
- Fulfilled by eCampus.com
- Option to keep after rental expires

$119.99

Buy accessOpens in a new tab

14 day temporary access available

**Access details**

- Pearson+ eTextbook with study tools
- Instant access once purchased
- Register with a Course ID, a link from your instructor or an LMS link (Blackboard™, Canvas™, Moodle or D2L®)

**Features**

- Interactive digital learning experience
- Help when and where you need it
- Instant feedback on assignments
- Apps and study tools

**Engineering Economy** helps you learn to make smart economic choices in your engineering career with a solid background in the principles, basic concepts and methodology of engineering economy. Practical, realistic explanations and examples help you develop proficiency in the methods and processes for making rational decisions.

The **18th Edition** modernizes content throughout, with more examples of engineering applications; offers Case Studies in twice as many chapters as the previous edition, with all existing case studies updated; features new and revised end-of-chapter problems; and much more.

### 1. Introduction to Engineering Economy

- 1.1 Introduction
- 1.2 The Principles of Engineering Economy
- 1.3 Engineering Economy and the Design Process
- 1.4 Using Spreadsheets in Engineering Economy
- 1.5 Try Your Skills
- 1.6 Summary

### 2. Cost Concepts and Design Economics

- 2.1 Cost Terminology
- 2.2 The General Economic Environment
- 2.3 Cost-Driven Design Optimization
- 2.4 Present Economy Studies
- 2.5 Case Study: The Economics of Daytime Running Lights
- 2.6 Value Engineering
- 2.7 In-Class Exercise
- 2.8 Try Your Skills
- 2.9 Summary

### 3. Cost-Estimation Techniques

- 3.1 Introduction
- 3.2 An Integrated Approach
- 3.3 Selected Estimating Techniques (Models)
- 3.4 Parametric Cost Estimating
- 3.5 Case Study: Electric Vehicle Battery Recovery
- 3.6 Electronic Spreadsheet Modeling: Learning Curve
- 3.7 In-Class Exercise
- 3.8 Try Your Skills
- 3.9 Summary

### 4. The Time Value of Money

- 4.1 Introduction
- 4.2 Simple Interest
- 4.3 Compound Interest
- 4.4 The Concept of Equivalence
- 4.5 Notation and Cash-Flow Diagrams and Tables
- 4.6 Relating Present and Future Equivalent Values of Single Cash Flows
- 4.7 Relating a Uniform Series (Annuity) to Its Present and Future Equivalent Values
- 4.8 Summary of Interest Formulas and Relationships for Discrete Compounding
- 4.9 Deferred Annuities (Uniform Series)
- 4.10 Equivalence Calculations Involving Multiple Interest Formulas
- 4.11 Uniform (Arithmetic) Gradient of Cash Flows
- 4.12 Geometric Sequences of Cash Flows
- 4.13 Interest Rates that Vary with Time
- 4.14 Nominal and Effective Interest Rates
- 4.15 Compounding More Often than Once per Year
- 4.16 Interest Formulas for Continuous Compounding and Discrete Cash Flows
- 4.17 Case Study: Understanding Economic Equivalence
- 4.18 In-Class Exercise
- 4.19 Try Your Skills
- 4.20 Summary

### 5. Evaluating a Single Project

- 5.1 Introduction
- 5.2 Determining the Minimum Attractive Rate of Return (MARR)
- 5.3 The Present Worth Method
- 5.4 The Future Worth Method
- 5.5 The Annual Worth Method
- 5.6 The Internal Rate of Return Method
- 5.7 The External Rate of Return Method
- 5.8 The Payback (Payout) Period Method
- 5.9 Case Study: Data Center Establishment Project
- 5.10 Electronic Spreadsheet Modeling: Payback Period Method
- 5.11 In-Class Exercise
- 5.12 Try Your Skills
- 5.13 Summary
- Appendix 5-A The Multiple Rate of Return Problem with the IRR Method

### 6. Comparison and Selection among Alternatives

- 6.1 Introduction
- 6.2 Basic Concepts for Comparing Alternatives
- 6.3 The Study (Analysis) Period
- 6.4 Useful Lives Are Equal to the Study Period
- 6.5 Useful Lives Are Unequal among the Alternatives
- 6.6 Personal Finances
- 6.7 Case Study: Ned and Larry’s Ice Cream Company
- 6.8 Postevaluation of Results
- 6.9 Project Postevaluation Spreadsheet Approach
- 6.10 In-Class Exercise
- 6.11 Try Your Skills
- 6.12 Summary

### 7. Depreciation and Income Taxes

- 7.1 Introduction
- 7.2 Depreciation Concepts and Terminology
- 7.3 The Classical (Historical) Depreciation Methods
- 7.4 The Modified Accelerated Cost Recovery System
- 7.5 A Comprehensive Depreciation Example
- 7.6 Introduction to Income Taxes
- 7.7 The Effective Corporate Income Tax Rate
- 7.8 Gain (Loss) on the Disposal of an Asset
- 7.9 General Procedure for Making After-Tax Economic Analyses
- 7.10 Illustration of Computations of ATCFs
- 7.11 Economic Value Added
- 7.12 In-Class Exercise
- 7.13 Try Your Skills
- 7.14 Summary

### 8. Price Changes and Exchange Rates

- 8.1 Introduction
- 8.2 Terminology and Basic Concepts
- 8.3 Fixed and Responsive Annuities
- 8.4 Differential Price Changes
- 8.5 Spreadsheet Application
- 8.6 Global Exchange Rates and Purchasing Power Concepts
- 8.7 Case Study: Selecting Electric Motors to Power an Assembly Line
- 8.8 In-Class Exercise
- 8.9 Try Your Skills
- 8.10 Summary

### 9. Replacement Analysis

- 9.1 Introduction
- 9.2 Reasons for Replacement Analysis
- 9.3 Factors that Must Be Considered in Replacement Studies
- 9.4 Typical Replacement Problems
- 9.5 Determining the Economic Life of a New Asset (Challenger)
- 9.6 Determining the Economic Life of a Defender
- 9.7 Comparisons in Which the Defender’s Useful Life Differs from that of the Challenger
- 9.8 Retirement without Replacement (Abandonment)
- 9.9 After-Tax Replacement Studies
- 9.10 Case Study: Replacement of a Hospital’s Emergency Electrical Supply System
- 9.11 In-Class Exercise
- 9.12 Try Your Skills
- 9.13 Summary

### 10. Evaluating Projects with the Benefit−Cost Ratio Method

- 10.1 Introduction
- 10.2 Perspective and Terminology for Analyzing Public Projects
- 10.3 Self-Liquidating Projects
- 10.4 Multiple-Purpose Projects
- 10.5 Difficulties in Evaluating Public-Sector Projects
- 10.6 What Interest Rate Should Be Used for Public Projects?
- 10.7 The Benefit−Cost Ratio Method
- 10.8 Evaluating Independent Projects by B−C Ratios
- 10.9 Comparison of Mutually Exclusive Projects by B−C Ratios
- 10.10 Case Study: Rural Broadband Internet Expansion
- 10.11 Try Your Skills
- 10.12 Summary

### 11. Breakeven and Sensitivity Analysis

- 11.1 Introduction
- 11.2 Breakeven Analysis
- 11.3 Sensitivity Analysis
- 11.4 Multiple Factor Sensitivity Analysis
- 11.5 CASE STUDY: If You Build It, They Will Come
- 11.6 Try Your Skills
- 11.7 Summary

### 12. Probabilistic Risk Analysis

- 12.1 Introduction
- 12.2 Sources of Uncertainty
- 12.3 The Distribution of Random Variables
- 12.4 Evaluation of Projects with Discrete Random Variables
- 12.5 Evaluation of Projects with Continuous Random Variables
- 12.6 Evaluation of Risk and Uncertainty by Monte Carlo Simulation
- 12.7 Performing Monte Carlo Simulation with a Computer
- 12.8 Decision Trees
- 12.9 Real Options Analysis
- 12.10 CASE STUDY: Retirement Balance
- 12.11 Summary

### 13. The Capital Budgeting Process

- 13.1 Introduction
- 13.2 Debt Capital
- 13.3 Equity Capital
- 13.4 The Weighted Average Cost of Capital (WACC)
- 13.5 Project Selection
- 13.6 Postmortem Review
- 13.7 Budgeting of Capital Investments and Management Perspective
- 13.8 Leasing Decisions
- 13.9 Capital Allocation
- 13.10 Summary

### 14. Decision Making Considering Multiattributes

- 14.1 Introduction
- 14.2 Examples of Multiattribute Decisions
- 14.3 Choice of Attributes
- 14.4 Selection of a Measurement Scale
- 14.5 Dimensionality of the Problem
- 14.6 Noncompensatory Models
- 14.7 Compensatory Models
- 14.8 Summary

### Appendices

- A. Accounting Fundamentals
- B. Abbreviations and Notation
- C. Interest and Annuity Tables for Discrete Compounding
- D. Interest and Annuity Tables for Continuous Compounding
- E. Standard Normal Distribution
- F. Selected References
- G. Solutions to Try Your Skills
- H. Answers to Selected Problems

#### Index

Need help? Get in touch