Question

Principles of Engineering Economy

1. If I considered the value of all alternatives in the present, which of the seven basic principles would I be applying? 2. Which principle is applied when one chooses dollars for alternative comparison? 3. The concept of feedback is embodied in which principle?

Answer 1

1) The first principle is used when we consider values all the alternative in the present.

The first principle states that develop the alternative for a detailed analysis which shows the time value of money of the alternative. The detailee analysis will help us to understand which alternative gives the good return at low cost or the investment which is best suited for our requirements. So first principle is always used when we consider values of all the alternative in present.

2) The principle of common unit of measure is applied when one chooses dollars for alternative comparison. People use this principle as if we are using more than one monetary unit it will be difficult for analysis ,so they will use most common monetary value which is applicable all over that is dollar.

3) The concept of feed back is emboiemb in the principle Revisit your decision. In this principle it states even a good decision may result in an outcome which we do expect , so try to understand the decision which you want to take and also take feed back from others which will help to get a better or a good outcome.

So the concept of feedback is emboiemb inthe last principle Revisit your decision.