# Z94.7 ENGINEERING ECONOMY

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Bibliography

MAPI METHOD. A procedure for equipment replacement analysis developed by George Terborgh for the Machinery and Allied Products Institute. It uses a fixed format and provides charts and graphs to facilitate calculations. A prominent feature of this method is that it includes explicitly an allowance for obsolescence.

MARGINAL COST. (1) The rate of change of cost as a function of production or output. (2) The cost of one additional unit of production, activity, or service. (See INCREMENTAL COST, DIRECT COST.)

MATHESON FORMULA. A title for the formula used for declining balance depreciation. (See DEPRECIATION, DECLINING BALANCE.)

MAXIMAX CRITERION. In decision theory, probabilities unknown, a rule that says choose the alternative with the maximum of the maximum returns identified for each alternative.

MAXIMIN CRITERION. In decision theory, probabilities unknown, a rule that says choose the alternative with the maximum of the minimum returns identified for each alternative. Also called a maximum security level strategy or Wald’s strategy.

MINIMAX CRITERION. In decision theory, probabilities unknown, a rule that says choose the alternative with the minimum of the maximum costs identified for each alternative. Also called a maximum security level strategy.

MINIMAX REGRET CRITERION. In decision making under uncertainty, a rule that says choose the alternative with the least potential net return or cost regret.

MINIMIN CRITERION. In decision theory, probabilities unknown, a rule that says choose the alternative with the minimum of the minimum costs identified for each alternative.

MINIMUM ATTRACTIVE RATE OF RETURN. The effective annual rate of return on investment, either before or after taxes, which just meets the investor’s threshold of acceptability. It takes into account the availability and demand for funds as well as the cost of capital. Sometimes termed the minimum acceptable return. (See COST OF CAPITAL, CUTOFF RATE OF RETURN.)

MINIMUM COST LIFE. (See ECONOMIC LIFE.)

MULTIPLE RATES OF RETURN (MULTIPLE ROOTS). A situation in which the structure of a cash flow time series is such that it contains more than one solving internal rate of return.

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