The design of a user friendly engineering economy analysis package for a microcomputer

Abstract

The design and features of a user friendly engineering economy analysis software package for the Apple II microcomputer is described. The software package is written in Applesoft Basic. An Apple II with 64k RAM, one or two disk drives and a line printer is required to use the software package. The package consists of five complementary programs: (1) Selection of the better of two alternatives using present-worth evaluations. (2) Conventional rate-of-return computations for a single project. (3) Selection from mutually exclusive alternatives using rate-of-return analysis. (4) Optimal capital allocation among several investment opportunities under risk. (5) Probabilistic after-tax economic analysis for a single project. All programs but (4) are based on the time value of money. Program (4) is a chance-constrained optimization model utilizing the Lagrange-multiplier technique. Program (5) implements depreciation, debt/equity financing, and taxes and performs a sequential after-tax Monte Carlo simulation over a specified life-span. The use of this software package does not require any previous computer or programming experience. A menu format is used. The software package allows the user to specify the shapes of the interest and inflation probability distributions on a year by year basis. The user has the option to specify the reinvestment rates. The package presents the results in tables and graphs. User acceptance has been excellent with this software package and this package is well suited for the use in an engineering economy class or for the practicing industrial engineer in industry.