Engineering Economics Flashcards
6 cards from real Fundamentals of Engineering practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Engineering Economics flashcards as text
What is the formula for the Future Worth (F) of a present sum (P) after n periods at interest rate i?
Answer: F = P(1 + i)ⁿ
The future worth formula F = P(1 + i)ⁿ compounds the present sum at rate i over n periods.
What is the breakeven point in engineering economics?
Answer: The output level where total revenue equals total cost
The breakeven point is where total revenue equals total cost, resulting in neither profit nor loss.
Which depreciation method gives the highest depreciation expense in the early years of an asset's life?
Answer: Double declining balance (DDB)
The double declining balance method applies twice the straight-line rate to the book value, giving the highest early depreciation.
Net Present Value (NPV) of a project is positive. What does this indicate?
Answer: The project returns more than the minimum attractive rate of return (MARR)
A positive NPV means the present value of cash inflows exceeds outflows, indicating returns exceed the MARR.
What does MARR stand for in engineering economics?
Answer: Minimum Attractive Rate of Return
MARR (Minimum Attractive Rate of Return) is the minimum return a project must earn to be considered acceptable.
Which method of economic comparison finds the interest rate that makes NPV = 0?
Answer: Internal Rate of Return (IRR)
The Internal Rate of Return (IRR) is the discount rate that makes the net present value of all cash flows equal to zero.