ABSTRACT
The primary goal of management is to maximize profitability for the firm and its shareholders, or to maximize cost-effectiveness in a public enterprise. Achievement of that goal depends in part on the type and timing of capital investments. Engineering economy focuses on the evaluation of capital investment alternatives by analyzing the amount and timing of each project's expected cash flows and expenditures. Central to this analysis is the concept of the time value of money and the techniques based upon it, compounding, discounting, and economic equivalence, which are presented in this chapter.
