Cases in Engineering Economy
William R Peterson and Ted G Eschenbach
Table of Contents
1. New Office Equipment: Student develops requirements with little given data for activities to be supported by new copier machines. Organizational thinking required.
2. Budgeting Issues: Strategies for a group's operating budget request. One focus is ethics.
3. Wildcat Oil in Kasakstan: Rough order of magnitude estimation of total facility cost and annual revenue. Option for NPV and different size facility.
4. Balder-Dash Inc.: Standard cost and allocated costs vs. true marginal cost (IE's).
5. Can Crusher: Basic time value of money, costs, and breakeven analysis.
6. Lease a Lot: Compares leasing and ownership. Results show importance of separating financing and investing decisions.
7. The Board Looks to You: Bond valuation with realistic business details including early-call premium. Medium difficulty. Good example of employer taking a small fact and making big assumptions about individual talents--why engineering students must keep learning.
8. Picking a Price: Simplified real estate analysis. Demonstrates analysis to screen before acquiring more data and further decision-making.
9. Recycling?: Financial analysis supports recycling cardboard and selling unusable pallets to recycler.
10. The Cutting Edge: Make vs. buy and machine selection.
11. Harbor Delivery Service: Annual comparison of diesel vs. gasoline engines.
12. Buying a Dream: Compare three alternative mortgages for a first-time home buyer.
13. Guaranteed Return: Risk vs. expected return and choice of interest rate.
14. Northern Gushers: Incremental oil production investment with possible double-root.
15. Pave the Stockpile Area?: Sensitivity analysis for IRR.
16. Great White Hall: Proposal comparison using B/C analysis for RFP with unclear specifications.
17. A Free Lunch?: Is proposal too good-to-be true from two perspectives? Realistic (unordered) statement of facts.
18. Gravity-Free High: New product with development stages and probability of failure.
19. Crummy Castings: Decision tree problem with modest ambiguity. Options create more challenging problems.
20. New World Mining: Includes inflation. Funding agency vs. national perspective. Simulation option to analyze uncertainty.
21. Glowing in the Dark: Expected return and variance for facility of minimal size, of that plus preparation for later expansion, and of the full-size now.
22. City Car: Decision tree analysis. Includes discussion of strategy and risk. Some assumptions must be made.
23. Washing Away: Levee height and probability of flood damage.
24. Sinkemfast: Decision tree with assumptions required for realistic comparisons. Info supports creation of new, better alternatives.
25. Raster Blaster: Questions to guide students. Includes breakeven analysis.
26. Molehill & Mountain Movers: Compare depreciation methods with option for inflation.
27. To Use or Not To Use?: Focus is treatment of sunk costs. More complicated than most. Some discoveries in the data gathering process. Solution uses equation rather than cash flow table.
28. Olives in Your Backyard: Emphasizes taxes and sensitivity analysis.
29. New Fangled Manufacturing: Emphasizes taxes and sensitivity analysis.
30. Supersonic Service?: Breakeven and sensitivity analysis.
31. Freeflight Superdiscs: Inflation and sensitivity analysis for three alternatives. Includes taxes.
32. Mr. Speedy: Includes two memos using different inappropriate financial comparisons. Choose optimal life for replacement of vehicles.
33. Piping Plus: Data from case intro, three memos, income statement, and balance sheet. Computer improvement in a professional services firm. Assumptions will lead to an instructive variety of results.
34. R&D Device at EBP: Equipment replacement cost comparison with unequal lives. Continuing demand requires careful analysis statement by the student because of detailed cost data. Before or after-tax.
35. Northern Windows: Tax affected energy conservation project for a home with simplifying assumptions made clear. Includes inflation.
36. Brown's Nursery (Part A): After-tax analysis of expansion opportunity.
37. Brown's Nursery (Part B): Adds inflation.
38. West Muskegon Mach. & Manuf.: More complex inflation and tax problem with sunk cost and leverage.
39. Uncertain Demand at WM3: Includes inflation, taxes, and uncertainty.
40. Olympic Bid Perspectives: Public sector with data and questions from 3 perspectives.
41. Metropolitan Highway: Realistic variety of benefits and costs. Requires that assumptions be made.
42. Protecting the Public: P(injury) and fraction of contact wearers must be "guestimated." Considers opportunity losses to other venues in visitor-days.
43. Bridging the Gap: Difficulty ranges from comparing three alternative bridges with different lives to considering growth in traffic and uncertain construction costs.
44. Sunnyside - Up or Not?: Uncertain growth rates over 30 years and setting utility rates.
45. Transmission Intertie: Electric power project with primary and secondary benefits.
46. Aero Tech: Capital budgeting with memos for three different approaches to ranking.
47. Bigstate Highway Department: Capital budgeting including mutually exclusive alternatives. Includes uncertain value of a life.
48. Dot Puff Project Selection: Public sector capital budgeting with added constraint on man-years required.
49. The Arbitrator: Includes two memos of suggested solutions for four projects with nine alternatives. Data presented in text discussion rather than tabulated.
50. Capital Planning Consultants: Capital budgeting including mutually exclusive alternatives. Includes uncertainties in first cost, annual benefit, and lives.
51. Refrigerator Magnet Company: Capital budgeting including mutually exclusive alternatives.
52. Aunt Allee's Jams and Jellies: Product costing needs activity based costs.
53. Problems in Pasta Land: Long case statement. Includes taxes and limited uncertainty.
54. Whirlwind Exploration Company: Modeling required economic size for development of an oil field. Detailed data in tables.