Engineering Economics of Life Cycle Cost Analysis

Errata

Use the links below to download updated tables, problems, and relevant solutions.

New Problem FILES

Description of changes and updates

1.     For Example 2.3 the interest rate should be 6% not 3%

2.     On page 32 in order to follow with the previous discussion rewrite

… to double (F=\$10,000)?

\$20,000 = \$10,000 (1+n(0.06))

to

…. To double (P=\$20,000)

\$40,000 = \$20,000(1+n(0.06))

3.     Change the title of Figure 2.7 from “present worth” to “CFD”

4.     On page 39 “=1.5.75” should be “=1.5075”

5.     Add P1=-PV(.1,1,,25000) P2=-PV(.1,2,,3000) P3=-PV(.1,4,,5000) Before the last statement starting with Thus.

6.     For Problem 2-1 assume the 15% MARR is compounded daily.  Add the sentence “Assume the 15% MARR is compounded daily.” to after the word “below.” Or the next to last sentence.

7.     For Problem 2-9 convert “Annual Maintenance” to “Monthly Maintenance” and \$50,000 to \$5,000/month and \$30,000 to \$3,000/month.

8.     For Problem 2-15 change the 3 to a . and then add another row with 360.

This better implies that you need 360 End of Periods or months.

9.     For Problem 2-22 change the compounding for the load from monthly to daily.  There is nothing wrong with the problem as written.  However, few if any loans are compounded monthly.  Daily compounding is more realistic.

10.     Also, for Problem 2-22, before bullet a. add “Using the Excel functions in Table 2.5,”

11.     For Problem 2-23 change “Using factor notations” to “Using the formulas in Table 2.5”.

12.     For Problem 2-47 change “factor notation” to “the equations in Table 2.5 (verify using the Excel functions)”.

13.     On page 217 replace “family of models uses” with “family of models ae regression based and use”.

14.     On page 220 replace “strongly coupled complex of” with “strongly coupled and complex”.

15.     For Problem 8-8 after the sentence that ends with “and so on” insert the sentence “The products must operate with strongly coupled and complex hardware, software, regulations, and operational procedures.”

16.     Also, for Problem 8-8, the actual values are off by a factor of 10.  For example, 12.5 should be 125 and so forth.

17.     For Problem 8-8 under Part b, before the last sentence that starts with “Is regression…” insert “This should be a single equation with 2 inputs (LOC and complexity) and a single output which should be development time in PSM (Hint: Use the regression tool from the Data Analysis tool pack.”

18.  Ad part d to Problem 12-11 that reads: d) Develop a simple breakeven chart to show management how sales affect profit and loss.

19.  For Problem 9-1 add the following e) Develop a one-page writeup of your results with a recommended CER.  Make sure you include a table listing all of the models, their r2, etc.

20.  Table 9.4 is incorrect (copy of Table 9.1).  The attached is correct.

21.     At the end of Section 12.2 add the following paragraph.

If the BCR<1 then based solely economic impact the project should not proceed.  If the BCR=1 then the costs equal the benefits and you should be indifferent about processing with the project.  Lastly, if the BCR>1 then the benefits exceed the costs, and the project should be allowed to proceed.  Note that the BCR is based solely on economic impact.

22.     For Problem 12-11 add the following e) Develop a  simple breakeven chart to show management how sales affect profit and loss.0

23.     In Example 12.2 after ROI =-0.5934 insert the following sentence.  A negative ROI value simply means that the investment lost money.

New Material

1.     See the new Table 2.5.

2.     See new Figure 3.1.

3.     Add new Section 3.3.2

4.     Add material on real property depreciation after Example 3.6.

5.     See new Tables 6.1, 6.2, 6.3, 6.5, 6.6

6.     See new Figure for Example 12.6

New Problems

1.     The following new problems were developed:

New Questions

1.     The following new questions were developed: