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Engineering Economic Decisions

This document discusses key factors in engineering project evaluation and economic decision making. It addresses four questions related to: 1) factors important for investment evaluation, 2) important items to consider for large engineering projects, 3) the definition of engineering economics, and 4) fundamental principles of engineering economics. The document determines that time, risk, expected profitability, timing of cash flows, degree of financial risk, economic decisions made by engineers, and the time value of money are most relevant for engineering project evaluation and economics. Marginal revenue exceeding marginal cost is not a fundamental principle.

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Tricia Mae Catapang
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745 views1 page

Engineering Economic Decisions

This document discusses key factors in engineering project evaluation and economic decision making. It addresses four questions related to: 1) factors important for investment evaluation, 2) important items to consider for large engineering projects, 3) the definition of engineering economics, and 4) fundamental principles of engineering economics. The document determines that time, risk, expected profitability, timing of cash flows, degree of financial risk, economic decisions made by engineers, and the time value of money are most relevant for engineering project evaluation and economics. Marginal revenue exceeding marginal cost is not a fundamental principle.

Uploaded by

Tricia Mae Catapang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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1. Which of the following statement is incorrect?

A. Economic decisions are time invariant.


B. Time and risk are the most important factors in any investment evaluation.
C. for a large-scale engineering project, engineers must consider the impact of the project
on company's financial statements.
D. One of the primary roles of engineers is to make capital expenditure decisions.

- Having economic decisions are not time invariant, we should consider time as one
of it’s key because it is important consideration while making a decision since it
impacts not only the present but also future results as the economy's worth
fluctuates over time.

2. When evaluating a large-scale engineering project, which of the following items is important?

A. Expected profitability
B. Timing of cash flows
C. Degree of financial risk
D. All of the above

- In order to have a successful project, all of these are important and need to consider
in evaluating a large-scale engineering project. Because it involves a big sum of
money, the projected profit should be calculated. Cash flow forecasting might help
you prevent activity delays. The degree of financial risk is critical to the project's
long-term viability.
-
3. Which of the following statements defines the discipline of engineering economics most
closely?

A. Economic decisions made by engineers.


B. Economic decisions related to financial assets.
C. Economic decisions primarily for real assets and services from engineering projects.
D. Any economic decision related to the time value of money.

- Economic decisions made by engineers most closely defines engineering


economics not only engineers are devoted to problem solving but also to decision
making at the operational level.
4. Which of the following statements is not one of the four fundamental principles of engineering
economics?

A. Receiving a dollar today is worth more than a dollar received in the future.
B. To expect a higher return on investment, you need to take a higher risk.
C. Marginal revenue must exceed marginal cost to justify any production.
D. When you are comparing different alternatives, you must not focus only on
differences in alternatives.

- It's critical to examine the varied consequences and possibilities of different


options while comparing them, because that's why we're comparing them in the
first place. This procedure will assist us in identifying viable options.

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