China 
Africa 
Explore chapters and articles related to this topic
Economic Considerations
Published in Yogesh Jaluria, Design and Optimization of Thermal Systems, 2019
The rate of return is an important concept in choosing different alternatives in the design process and in the consideration of the economic viability of an investment. Sometimes, the time value of money is not considered and the annual profit and expenses are employed, taking depreciation as an expense, to calculate the return. However, a more useful and widely used approach for calculating the rate of return is one that is similar to the concept of return on investment presented earlier. The rate of return is treated as an interest rate and is the rate at which the net present worth is zero. Thus, this rate of return, which is also known as discounted cash flow or internal rate of return, indicates the return on the investment as well as repayment of the original investment. All the costs and incomes are considered to calculate the rate of return, which is the interest rate at which the income and the costs balance out. The following example illustrates these calculations.
Time Value of Money
Published in John E. Schaufelberger, Giovanni C. Migliaccio, Construction Equipment Management, 2019
John E. Schaufelberger, Giovanni C. Migliaccio
Contractors often want to estimate the prospective rate of return on an investment or compare anticipated rates of return for several alternative investments. The rate of return is the annual interest rate at which the sum of investment and expenditures equals total income from the investment. Rate of return analysis involves setting receipts equal to expenditures and solving for the interest rate. Two situations can occur: (a) sometimes the rate of return can be solved for directly with aid of interpolation, but (b) in most cases it can be found only through a trial-and-error solution. In the latter situation, two or more interest rates are assumed, equivalent present worth or annual costs are calculated, and the rate of return is found by interpolation. Both types of problems are illustrated in the following two examples.
Engineering Economics
Published in Steven G. Penoncello, Thermal Energy Systems, 2018
If there were no such thing as an interest rate, economics would be fairly simple (and banks would be out of business). For example, if you were to borrow $12,000 from a bank and pay it back over a year in equivalent monthly installments at 0% interest, your monthly payment would be $12,000/12 = $1,000. This is easy. However, in the real world, money costs money. If you borrow money, you are expected to pay for the borrowed money over time. Likewise, if you invest money, you expect a return on your investment over time. The cost of money over time is known as interest. The return on an investment over time is called the rate of return. Often, the word interest is used for both scenarios. In a business or engineering setting, company fiscal and/or project managers determine a minimum acceptable rate of return (MARR) for a project. This represents the minimum rate of return that the company can accept before the project is approved.
Average internal rate of return for risky projects
Published in The Engineering Economist, 2021
Gordon Hazen, Carlo Alberto Magni
Rates of return are used for measuring projects’ financial efficiency, making investment decisions, compensating managers, and assessing performance measurement. While the internal rate of return (IRR) is widely employed in industry and finance, it suffers from well-known drawbacks. These drawbacks can be bypassed by using instead the AIRR approach introduced by Magni (2010). In this paper we address the issue of risky cash flows, where the IRR is known to be inconsistent or possibly nonexistent, by uniquely extending the AIRR to risky projects evaluated under an expected utility approach.
Life cycle cost analysis of a built-in guide-type robot for cleaning the facade of high-rise buildings
Published in Journal of Asian Architecture and Building Engineering, 2022
Dong-Jun Yeom, Ju-Hak Kim, Jun-Sang Kim, Young Suk Kim
The rate of return (return on investment) analyzes economic efficiency by computing the rate of return that makes the NPV of an investment equal to zero. As presented in equation (3) and Figure 13, the rate of return of the automated method compared to the conventional method was found to be 7.19%, which indicates very high profitability for the developed robot. (4) Breakeven point analysis