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Engineering Economic Analysis: Slide 1 Econ & Enviro Issues In Materials Selection Randolph KirchainMassachusetts Institute of Technology Department of Materials Science & Engineering Massachusetts Institute of TechnologyDepartment of Materials Science & EngineeringEngineering Economics : Comparing Financial Characteristics of Design Options Engineering Economic Analysis: Slide 2 Econ & Enviro Issues In Materials Selection Randolph KirchainMassachusetts Institute of Technology Department of Materials Science & Engineering Massachusetts Institute of TechnologyDepartment of Materials Science & EngineeringEngineering Econ Example: Comparing Alternatives BIG DIG $$$$ $$ $$Where Should You Build?

Determining Equivalence: Issue - Value over time • Money now has a different value than the same amount at a different date – Would you prefer $75 today or $80 in one year? – It depends – Rate of return on investment • Proper name: Discount Rate, i or r – Future benefits / costs are reduced (ie, “discounted”) to compare with present 3.080 Econ & Enviro Issues In Materials …

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