CCE Financial Analysis & Economic Evaluation Flashcards
6 cards from real CCE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CCE Financial Analysis & Economic Evaluation flashcards as text
What does the Net Present Value (NPV) method measure in engineering economic analysis?
Answer: The difference between the present value of cash inflows and outflows
NPV measures the difference between the present value of all cash inflows and outflows, with a positive NPV indicating a financially acceptable investment.
If a project has an Internal Rate of Return (IRR) greater than the Minimum Attractive Rate of Return (MARR), the project is considered:
Answer: Economically acceptable
When the IRR exceeds the MARR (also called the hurdle rate), the project generates returns above the company's minimum requirement and is economically acceptable.
The Benefit-Cost Ratio (BCR) method recommends project acceptance when BCR is:
Answer: Greater than or equal to 1.0
A BCR ≥ 1.0 indicates that the present value of benefits equals or exceeds the present value of costs, making the project economically justified.
Which depreciation method allocates an equal amount of depreciation expense each year over the asset's useful life?
Answer: Straight-Line
The Straight-Line depreciation method divides the depreciable cost equally across each year of the asset's useful life.
What is 'salvage value' in the context of engineering economic analysis?
Answer: The estimated market value of an asset at the end of its useful life
Salvage value is the estimated residual market value of an asset at the end of its useful life, used in depreciation calculations and life-cycle cost analysis.
The 'payback period' method calculates:
Answer: The time required to recover the initial investment from net cash inflows
The payback period measures how many years it takes for cumulative net cash inflows to equal the initial investment, ignoring the time value of money.