Double vision: Insights about the origin and interpretation of multiple IRRs

The ability of a project's internal rate of return (IRR) to quantify its economic return has been questioned by many scholars over the past 60 years, most recently by Magni (2010 Magni, C.A. (2010) Average internal rate of return and investment decisions: a new perspective. The Engineering Economist, 55(2), 150–180. [Google Scholar], 2013 Magni, C.A. (2013) The internal rate of return approach and the AIRR paradigm: a refutation and a corroboration. The Engineering Economist, 58(2), 73–111. [Google Scholar]). Although IRR is a plausible—albeit imperfect—measure of a project's economic return when the cash flow stream is conventional, IRR can be an untenable measure of an unconventional project's economic return. The goal of this article is to identify a simple, intuitive explanation of IRR, one that can be applied to any cash flow pattern. To do this, the article shows how a project's IRR systematically changes when it first crosses from the conventional into the unconventional realm (i.e., a small cash outflow is appended to a conventional cash flow stream) and then as it becomes progressively more unconventional. This process reveals that the most robust economic interpretation of IRR—for both conventional and unconventional projects—is that a project's IRRs are external benchmarks that divide the set of all plausible discount rates into positive and negative net present value (NPV) ranges, rather than internally generated returns. Because it can be difficult to estimate a project's cost of capital with precision, this information can help guide the sensitivity analysis of a project.     

MICROCOMPUTER SOFTWARE COSTING LESS THAN $1000 FOR ECONOMIC AND MULTI-ATTRIBUTE DECISION ANALYSIS∗

Commodity price simulation is useful in many engineering economics applications, yet discrete approximations of the continuous stochastic processes used in modeling commodity prices are not always straightforward. This article describes the exact solution for discretely simulating the Schwartz and Smith (2000 Schwartz, E. and Smith, J. E. 2000. Short-term variations and long-term dynamics in commodity prices. Management Science, 46(7): 893–911. [Crossref], [Web of Science ®] , [Google Scholar]) two-factor model of commodity prices.     

Discounting Indices Proposed for Capital Investment Evaluation: A Further Examination

A recent publication [2 Bernhard , Richard H. , “ A Comprehensive Comparison and Critique of Discounting Indices Proposed for Capital Investment Evaluation ,” The Engineering Economist , Volume 16 , Number 3 , Spring 1971 .[Taylor &; Francis Online] , [Google Scholar]] in this journal presented a comprehensive comparison and critique of discounting indices proposed for (i) the examination of whether a proposed independent project should be accepted and (ii) selection of a project from a set of mutually exclusive projects. The present paper examines procedures available in the literature of engineering and managerial economics and in practice for selecting projects from a given number of proposed capital investment projects, if a given capital constraint does not permit the undertaking of all proposed projects. It appears that the present state of the art is subject to much controversy and confusion. The ensuing presentation intends to rectify this situation. In addition, a procedure for the above selection problem is developed. Usage of this procedure is recommended for the many policy makers who are continually faced with the trade-off between elaborate methods on the one hand and cursory /approximations on the other.     

A review of: “ENGINEERING ECONOMY, 4th. Ed.” By E. Paul DeGarmo The Macmillan Company 1967 532 pp. $10.95.

A risk measure, expected opportunity loss (EOL), is introduced to quantify the potential loss of making an incorrect choice in risk-based decision making. Different from Savage's (1951 Savage, L. J. 1951. The theory of statistical decision. Journal of the American Statistical Association, 46(253): 55–67. [Taylor &; Francis Online], [Web of Science ®] , [Google Scholar]) minimax regret principle, EOL can account for the unbounded continuous random outcomes of alternatives and decision makers’ acceptable risk. This article studies the effects of the forms of loss function, correlation among outcomes, and the acceptable risk on the ranking results by considering the loss function in the power form. The results show that the loss functions and the outcomes correlations can significantly influence the rankings of alternatives in risk-based decision making.     

A review of: “APPLIED ECONOMIC ANALYSIS FOR TECHNOLOGISTS,ENGINEERS, AND MANAGERS ” BY MICHAEL S. BOWMAN Prentice-Hall,Inc., Upper Saddle River,New Jersey, 1999, xii + 561 pp., ISBN: 0-13-375932-6, List: $76.75.

In their recent paper Tang and Tang (2003 Tang, S. L. and Tang, H. J. 2003. The variable financial indicator IRR and the constant economic indicator NPV.. The Engineering Economist, Vol. 48(No. 1): pp. 69–78. [Taylor &; Francis Online] , [Google Scholar], pp. 69–78) revive a longstanding controversy—net present value (NPV) versus internal rate of return (IRR)—by characterizing the NPV as an economic indicator and the IRR as a financial one. The paper implies that this distinction justifies ranking financial alternatives by ranking their IRRs. In the current article, it is argued that the direct IRR ranking does not necessarily provide the same evaluation environment—and therefore a fair comparison—for each alternative involved, and that the incremental ranking approach is needed to remedy this shortcoming. The article also points out that Tang and Tang's numerical examples of simple projects with one sign change in their cash flow patterns do not address the problem of multiple IRRs, which consequently renders Tang and Tang's ranking approach dysfunctional. It is demonstrated that the concept of a true rate of return, substituting for the non-performing IRR and applied in conjunction with the incremental approach, provides an adequate tool for ranking mutually exclusive projects or a project's technical or financial alternatives.     

Efficiencies,market power and horizontal merger

In June 1982 the Justice Department issued itsMerger Guidelines which specify in terms of the Herfindahl index (H) what combinations of merger size and post-merger H are likely to lead to a merger challenge. This paper assesses theseGuidelines using Williamson's (1968) well-known model in which an optimal merger policy is viewed as one that considers both the price and cost consequences of merger. The Williamson model is recast in terms of H and changes in H and linked to theGuidelines. This allows an assessment of the welfare congequences of an industry merger for any given level of concentration and merger-produce changes in concentration. Among the conclusions are that, consistent with theGuidelines, higher values of H make socially successful mergers less likely, and a more appropriate, if perhaps not more feasible, focus for theGuidelines are coordination adjusted measures of concentration and merger size.     

Factors influencing student success on open-ended design problems

Open-ended design problems have become an important component in our educational landscape (Grubbs and Strimel in J STEM Teach Educ 50(1):77–90, 2015; Jonassen et al. in J Eng Educ 95:139–151, 2006; National Research Council in Education for life and work: developing transferable knowledge and skills in the 21st Century, National Academies Press, Washington, 2012; Strimel in Technol Eng Teach 73(7):8–18, 2014a). The ability of students to confront open-ended problem scenarios, think creatively, and produce novel designs have all been lauded as necessary skills for today’s twenty first century learners (Partnership for 21st Century Skills in P21 framework definitions, Author, Washington, 2016). This emphasis on open-ended design problems in problem-based learning scenarios has been tied to workforce and higher education preparation for students (National Academy of Engineering and National Research Council in STEM integration in K–12 education: status, prospects, and an agenda for research, National Academies Press, Washington, 2014; National Research Council in Engineering in K–12 education: understanding the status and improving the prospects, National Academies Press, Washington, 2009; Strimel in Technol Eng Teach 73(5):16–24, 2014b). However, little research has been conducted to identify the impact of potentially-influential factors on student success in such open-ended design scenarios. Therefore, the researchers examined data from 706 middle school students, working in small groups, as they completed an open-ended design challenge to determine the relationships between a variety of potentially-influential factors and student performance, as measured through adaptive comparative judgment. The analysis of the data revealed several relationships, significant and not significant, between identified variables and student success on open-ended design challenges.     

Exploring perceptions and attitudes towards teaching and learning manual technical drawing in a digital age

This paper examines the place of manual technical drawing in the 21st century by discussing the perceived value and relevance of teaching school students how to draw using traditional instruments, in a world of computer aided drafting (CAD). Views were obtained through an e-survey, questionnaires and structured interviews. The sample groups represent professional CAD users (e.g., engineers, architects); university lecturers; Technology Education teachers and student teachers; and school students taking Scottish Qualification Authority (SQA) Graphic Communication courses. An analysis of these personal views and attitudes indicates some common values between the various groups canvassed of what instruction in traditional manual technical drafting contributes towards learning. Themes emerge such as problem solving, visualisation, accuracy, co-ordination, use of standard conventions, personal discipline and artistry. In contrast to the assumptions of Prensky’s thesis [(2001a) Digital natives, digital immigrants. On the Horizon 9, 5. NCB University Press Retrieved Oct 2006 from http://www.marcprensky.com/writing/Prensky%20-%20Digital%20Natives,%20Digital%20Immigrants%20-%20Part1.pdf; (2001b) Digital natives digital immigrants, Part 2: Do they really think differently? On the Horizon 9, 6. NCB University Press retrieved Oct 2006 from http://www.marcprensky.com/writing/Prensky%20%20Digital%20Natives,%20Digital%20Immigrants%20-%20Part2.pdf] of digital natives, the study reported in this paper indicates that the school students apparently appreciate the experience of traditional drafting. In conclusion, the paper illustrates the perceived value of such learning in terms of transferable skills, personal achievement and enjoyment.     

An economic-statistical design of double sampling control chart

The double sampling (DS) chart can reduce the sample size when monitoring the process mean. In this study, Duncan's cost model was modified by adding the statistical constraints to develop the design model of DS chart for the optimization of design parameters—sample size, control limit coefficient, warning limit coefficient and sampling interval. A numerical example was provided to illustrate the use of this model. A sensitivity analysis of the effects of model parameters and statistical constraints on the optimal design of DS chart was also performed.     

Who Invented the Lerner Index? Luigi Amoroso, the Dominant Firm Model, and the Measurement of Market Power

The invention of the price/cost margin (P-MC)/P as an index of market power is usually credited to Lerner (Rev Econ Stud 1(3):157?C175, 1934). Landes and Posner (Harv Law Rev 94(5):937?C996, 1981) is similarly often considered the main reference for the generalized version of the index in the case of a dominant firm that shares the market with price-taking rivals. From the viewpoint of the history of industrial economics both claims are incorrect. It was not Lerner who invented the price/cost margin index and the generalized version was fully derived before WWII. In both cases, priority should be given to Luigi Amoroso, the leading Italian mathematical economist in the interwar decades. In the latter case the names of Heinrich von Stackelberg and George Stigler also deserve credit.     

Perspectives of authenticity: implementation in technology education

To meet the intentions of the New Zealand Curriculum 2007 teachers must critically reflect on their role and their idea of what defines ‘best practice’ for teaching and learning in the twenty-first century. The teacher’s role has changed considerably over time. There is now, more than ever, a need for much greater transparency, accountability and collaborative practice within education. Famous philosophers and theorists including Plato, Rousseau and Dewey have expounded ideals of authenticity and authentic engagement, but it is only with the spread of constructivism that authenticity has gained more favour. The authors will investigate perspectives of authenticity, authentic learning, and authentic activities (Kreber et al. in Adult Educ Q Am Assoc Adult Contin Educ 58(1):22–43, 2007; Newmann in Authentic achievement: restructuring schools for intellectual quality, Jossey-Bass Publishers, San Fransisco, 1996; Newmann and Wehlage in Educ Leadersh 50(7):8–12, 1993; Reeves et al. in Quality conversations. Paper presented at the 25th HERDSA annual conference, 2002; Splitter in Stud Philos Educ 28(2):135–151, 2008). Through qualitative investigation they identify and summarise key viewpoints and demonstrate how these can be successfully implemented through programmes of technology education. A model of authentic technology for producing quality technological outcomes is presented. The authors show how an activity from an initial teacher education course in technology education uses identified aspects of authentic technological practice through the various dimensions of authenticity to develop enduring learning for students. They consider the role of context in developing learning and introduce some new ideas on successful student engagement in the field of conation (Riggs and Gholar in Strategies that promote student engagement, Corwin Press, California, 2009). Conation is defined as the will, drive and effort behind students’ engagement in learning and is increasingly seen as an integral part of authentic education.     

Sketching by design: teaching sketching to young learners

Recent science educational reforms in the United States have prompted increased efforts to teach engineering design as an approach to improve STEM (Science, Technology, Engineering, and Mathematics) learning in K-12 classrooms. Teaching design in early grades is a new endeavor for teachers in the United States. Much can be learned from design teaching and research on K-12 design education outside of the US. The purpose of this study was to explore how students learn and use design sketching to support their learning of science and design practices. Researchers provided a treatment of design sketching instruction based on best practices of prior research finding (Hope in Des Technol Educ Int J 10: 43–53, 2005; Gustafson et al. J Technol Educ 19(1):19–34, 2007). A delayed treatment model was used to provide a two-group counterbalanced quasi-experimental design to compare an experimental group and comparison (delayed treatment) group results from (6) grade 3 classrooms. Researchers employed Hope’s Des Technol Educ Int J 10: 43–53, (2005) frame to organize sketching data for analysis. Findings from this study indicated that design instruction treatment did improve student’s design and communication practices, moving from using sketching as a container of ideas to the use of sketching as a form of design communication and to refine design ideas. Both the treatment and comparison groups improved sketching skills after treatment was provided to both groups. Sketching is a design practice that can also help student learn science concepts through the generation of mental models of conceptual understanding.     

The Rationality of U.S. Regulation of the Broadcast Spectrum in the 1934 Communications Act

The Federal Radio Commission regulated radio broadcasting, 1927–1934. With the passage of the Communications Act of 1934, the 1927 Radio Act (enabling the Commission) was re-enacted in whole. This congressional endorsement yields key evidence as to what policy outcomes were intended, differentiating competing theories for the origins of spectrum allocation law: Coase (J Law Econ 2(1):1–40, 1959), emphasizing policy error; Hazlett (J Law Econ 33:133–175, 1990), focusing on “franchise rents” in a public choice framework; and the “public interest” hypothesis, reconstructed by Moss and Fein (J Policy Hist 15(4):389–416, 2003). Congress’ revealed preferences prove consistent with the franchise rents theory, while contradicting the other two.     

Challenges for Empirical Research on RPM

This article discusses the empirical challenges that researchers face when demonstrating the existence and effects of resale price maintenance (RPM). We outline three approaches for finding price effects of RPM and the corresponding hurdles in data and methodology. We show that the quantity test that was suggested by Posner (Univ Chic Law Rev 45(1):1–20, 1977; Univ Chic Law Rev 48:6–26, 1981) does not identify the change to welfare when demand-enhancing effects are considered generally. Finally, we present some solutions to the challenge of identifying welfare effects, and we suggest guidelines for future research.     

<Emphasis Type="Italic">GTE Sylvania</Emphasis> and Interbrand Competition as the Primary Concern of Antitrust Law

Footnote 19 of the landmark U.S. antitrust decision in Continental T.V. v. GTE Sylvania, Inc. 433 U.S. 36 (1977) declares that “Interbrand competition … is the primary concern of antitrust law.” We trace the antecedents and influence of this declaration, argue that it is inappropriate, and conclude that it should be abandoned.     

Examining design cognition coding schemes for P-12 engineering/technology education

Cultivating students’ design abilities can be highly beneficial for the learning of science, technology, engineering, and mathematics (STEM) concepts, and development of higher-order thinking capabilities (National Academy of Engineering and National Research Council in STEM integration in k-12 education: status, prospects, and an agenda for research, The National Academies Press, Washington, 2014). Therefore, examining students’ strategies, how they distribute their cognitive effort, and confront STEM concepts during design experiences, can help educators identify effective and developmentally appropriate methods for teaching and scaffolding design activities for students (National Research Council in standards for k-12 engineering education? The National Academies Press, Washington, 2010). Yet, educational researchers have only recently begun examining students’ engineering design cognition at the P-12 level, despite reports such as Standards for K-12 Engineering Education? (National Research Council 2010) designating this area of research as lackluster. Of the recent studies that have investigated engineering design cognition at the P-12 level, the primary method of investigation has been verbal protocol analysis using a think-aloud method (Grubbs in further characterization of high school pre- and non-engineering students’ cognitive activity during engineering design, 2016). This methodology captures participants’ verbalization of their thought process as they solve a design challenge. Analysis is typically conducted by applying a pre-determined coding scheme, or one that emerges, to determine the distribution of a group’s or an individual’s cognition. Consequently, researchers have employed a variety of coding schemes to examine and describe students’ design cognition. Given the steady increase of explorations into connections between P-12 engineering design cognition and development of student cognitive competencies, it becomes increasingly important to understand and choose the most appropriate coding schemes available, as each has its own intent and characteristics. Therefore, this article presents an examination of recent P-12 design cognition coding schemes with the purpose of providing a background for selecting and applying a scheme for a specific outcome, which can better enable the synthesis and comparison of findings across studies. Ultimately, the aim is to aid others in choosing an appropriate coding scheme, with cognizance of research analysis intent and characteristics of research design, while improving the intentional scaffolding and support of design challenges.     

Potential competition and the factors influencing banking concentration

Multiple regression analysis is used to study the factors influencing market concentration in urban banking markets. The results indicate that independentde novo entry and shifts in population from the central city to the suburbs can be important deconcentrating factors in urban banking markets. In terms of the potential competition doctrine, the results suggest that attractive banking markets are likely to attract enough actual and potential entrants to mitigate any problems associated with a leading bank acquisition by a potential entrant. On the other hand, potential competition is more likely to be an issue in less attractive banking markets where the probability of entry is low.     

Exploring pupils’ beliefs about designers and designing

The purpose of this paper is to report on an investigation into pupil beliefs about designers and designing conducted as part of a research project focussing on Designerly Activity in Secondary Design and Technology which builds upon a pilot study (Barlex and Trebell in Int J Technol Design Educ, 2007). Four research questions drove this element of the study: (a) What do pupils believe designers do? (b) What do pupils believe about the knowledge and skills designers must possess? (c) What do pupils believe designers are like? (d) What do pupils believe about the design decisions made by the designer of a given product? This paper compliments the work of Welch et al. (Designing the future: The design and technology association international research conference 2006, University of Wolverhampton, Telford, 2006) relating to student beliefs about designers and designing by drawing on some elements of the research design to inform this study. Pupil responses to questions relating to the role of the designer, what designers are like and what designers need to know are in line with the findings of Welch et al. (Designing the future: The design and technology association international research conference 2006, University of Wolverhampton, Telford, 2006) in their study of elementary students beliefs about designers and designing with both studies concluding that the qualities ascribed to the designer are positive and non-stereotypical—they can be young or old, female or male.     

A note on vertical market foreclosure

The judicial fear of vertical market foreclosure has been criticized severely in the academic literature. The focus of this criticism isnot that foreclosure is impossible; rather, it is that foreclosure is not a profitable business strategy. In this note, we show that this criticism is not valid under conditions of partial ownership. If effective vertical control can be achieved with partial ownership, vertical market foreclosure can be used to increase the partial owner's profits. We use theduPont (GM) litigation as a vehicle to explore this point.