A Review of: “PROFITABILITY AND ECONOMIC CHOICE” by Paul H. Jeynes The Iowa State University Press 1968 622 pp. $13.50

Semisolid die casting (SSDC) is a newly developed technology to improve the quality of products and to reduce the costs of liquid die casting process. We assessed the gas-induced semisolid process (GISS), which generates a semisolid metal for die casting, in this comparison of the costs per unit between a traditional liquid die casting process and the semisolid die casting process. A process-based costing model (PBCM) was created to estimate the production costs. In principle, the PBCM consists of three submodels: process model, operation model, and financial model. This study indicates that three main factors, namely cycle time, rate of waste, and die life, affected the unit production costs. The production cost estimates decreased by approximately 13% when the process was switched from a liquid to a semisolid one.     

A Review of: “STATISTICS OF EXTREMES” By Emil J. Gumbel Columbia University Press New York, 1958 375 pp. $15.00

Standard procedures for evaluating future cash flows are to find an appropriate discount rate consistent with the cash flow's risk and then to derive a present value. While discounted cash flows seem appropriate for many instances, finding appropriate discount rates is often difficult, or discount rates may not exist when the risk is actually a function of a decision that requires the cash-flow valuation. We consider two approaches that have been suggested to alleviate this problem: the capital asset pricing model (CAPM) and the risk-neutral pricing arguments from option theory. We discuss the assumptions inherent in these models and show the results on the well-known news vendor model. Our option pricing results correspond to Singhal's [17] results using CAPM and a different valuation procedure for the option pricing model. We, however, derive a simpler expression that clearly illustrates differences from the standard form ignoring risk.     

A Review of: “ECONOMIC DECISION MODELS FOR ENGINEERS AND MANAGERS” By James L. Riggs McGraw-Hill Book Company 1968 pp.xvi,401 $11.50

This study breaks down the use of capital budgeting procedures between industries. While it is easy to state that the use of capital budgeting analysis has become more sophisticated over the decades, the question remains as to whether different industries have followed the same pattern. Three hundred two Fortune 1,000 companies responded to a survey organized along industry lines. Chi-square independence of classification tests indicated that a null hypothesis of no significant relationship between industry classification and capital budgeting procedures could be rejected in a number of decision-making areas including goal setting, rates of return, and portfolio considerations. Just as industry patterns affect financing decisions (debt vs. equity), they also affect capital budgeting decisions, and this study emphasizes that point.     

A Review of: “ECONOMIC ANALYSIS FOR HIGHWAYS” By Robley Winfrey International Textbook Company 1969 923pp. $17.50

Five of the seven factors in most common use for compound interest calculations involve a uniform series of payments (or receipts). These interest factors, for use when interest is compounded at discrete points in time, are commonly referred to as the uniform series present worth factor, the uniform series compound amount factor, the capital recovery factor, the sinking fund factor and the uniform series gradient conversion factor. The proper use of these five factors requires that the period of time between the compoundings of interest coincide with the period of time between the uniform payments. If the interest is compounded more frequently (assume by an integer number of times) than the payments, then the best way to apply the compound interest factors is to determine the effective interest rate between payments. If interest is compounded less frequently than the payments (assume there are an integer number of payment periods within each compounding period), the correct solution procedure is not well known. Three methods are discussed for solving problems when interest is compounded less frequently than payments are made. It is argued that the method proposed in this note is better than the other two methods in popular use from both a theoretical and practical standpoint.     

A Review of: “THE STAGES OF ECONOMIC GROWTH” A Non-Communist Manifesto By W. W. Rostow Cambridge University Press,New York, 1960 179 pp. Cloth ed. $3.75; paper ed. $1.45

History records that political economy received at least perfunctory attention in what were then engineering schools, over one hundred and thirty years ago. In 1827, Valentine B. Horton, who was later to become a Whig congressman and to make and lose a fortune, became “a professor of Moral Philosophy and Political Economy” at the American Literary, Scientific and Military Academy, the forerunner of Norwich University.¹ During the 1840s and ′50s, many engineering schools included a few lectures in moral philosophy and political economy in their programs. More formal and more enthusiastic promotion of economics on engineering campuses was evident under the aegis of Francis Amasa Walker, a noted economist and statistician, who, after service at the Sheffield School at Yale, became president of Massachusetts Institute of Technology in the early l88Os. Under his guidance, and that of Davis R. Dewey, who became an assistant professor of Economics and Statistics at M.I.T. in 1888, economics began to flourish on at least one engineering campus.     

A Review of: “FLOOD PLAIN MANAGEMENT: IOWA'S EXPERIENCE” Edited by Merwin D. Dougal Iowa State University Press 1969 270pp. $6.95

In its development as academic subject matter, engineering economics started as a set of simple determinations of alternative costs for engineering projects, predominately in the civil and mechanical fields. It subsequently began using later-developed techniques of quantitative analysis such as operations research, microeconomics, managerial economics, and finance. To reinforce its position in the engineering curriculum for the ever more important environmental sciences, it is suggested that engineering economics courses seek to bring their analytic resources to bear on the many possible topics included in this set of disciplines.     

A Review of: “REAPPRAISAL OF A ROAD PROJECT IN IRAN” By Herman G. Van Der Tak and Jan de Weille World Bank Staff Occasional Papers - No. 7 The Johns Hopkins University Press 1969 127pp. $3.00

This paper presents time-dependent deterministic and stochastic variations of common discounted cash flow formulae with explicit consideration given to inflation. The cash flows, the rates of discount or of compounding, and the rate of inflation are allowed to vary with time in a deterministic as well as random fashion in equations for the Compound Amount of a Single Payment, Present Worth of a Single Payment, Amount of an Annuity, Periodic Deposits to Accumulate a Future Amount, Present Worth of an Annuity, Capital Recovery, and the Present Worth of a Deferred Annuity.