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Engineering Economy, 5/e
Leland Blank, Texas A&M University
Anthony Tarquin, University of Texas - El Paso
Making Choices: The Method, MARR, and Multiple Attributes

Learning Objectives

Purpose: Choose an appropriate method and MARR to compare alternatives economically, and using multiple attributes.

This chapter will help you:


1. Choose a method

Choose an appropriate method to compare mutually exclusive alternatives.

2. Cost of capital and MARR

Describe the cost of capital and its relation to the MARR, while considering reasons for MARR variation.

3. WACC

Understand the debt-to-equity mix and calculate the weighted average cost of capital (WACC).

4. Cost of debt capital

Estimate the cost of debt capital.

5. Cost of equity capital

Estimate the cost of equity capital, and explain how it compares to WACC and MARR.

6. High D-E mixes

Explain the relation of corporate risk to high debt-to-equity mixes.

7. Multiple attributes

Identify and develop weights for multiple attributes used in alternative selection.

8. Weighted attribute method

Use the weighted attribute method for multiple-attribute decision making.








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