Question
a) In financial accounting or engineering economics, it is often stated that money earned today is worth more than money earned in the future, even
a) In financial accounting or engineering economics, it is often stated that money earned today is worth more than money earned in the future, even in the absence of inflation. Briefly explain why this is the case, and state how do financial institutions and Engineering businesses account for this "time value" of money.
b) An automotive repair company is evaluating two different alternatives for expansion. Their first alternative is to buy a small property, invest in machinery, acquire a license, and manufacture some of the parts they often require for their repairs. Their other alternative is to sign a multi-year deal with a supplier which would be sending the parts per request. The first alternative obviously requires a significantly larger capital investment considering it is a much larger undertaking than the second alternative. Which comparison method should be used in this case? And why is this comparison method most appropriate?
c) On financial balance sheets, there is often a section titled "Owner's equity". Briefly explain what Owner's equity is and how does it relate to a company's valuation.
d) What does WBS stand for? Why is it important to develop a WBS?
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