Engineering Economics - Cost Index Method

Engineering Economics
Chapter 11 - Estimating Costs
Section 11.3 - Cost Index Method
Example 11.2
Textbook:
Blank, L., & Tarquin, A. (2008). Basics of engineering economy. Boston: McGraw-Hill Higher-Education.
(ISBN: 9780073401294)

[@lpzulu]

Thank you so much for this. It really helped make things understandable

[@sc_maldonado]

Thank you for watching! :)

[@mohamedelkholypmp]

Thank you so much Sofia for this lesson , Greetings from Egypt .

[@sc_maldonado]

Thank you for watching! Best wishes for the new year!

[@mohamedelkholypmp]

@@sc_maldonado Thank you Sofia , Happy new year .

[@debankanmitra2425]

i have a confusion i found this is formula on chatgpt : Cost Index = (Cost at current time / Cost at base time) * 100 , i am confused when to apply which one , can you pls help me? and why we are doing ' * 100 '

[@sc_maldonado]

Great question! This formula that you are referring to is for developing cost indexes. (Cost indexes are already tabulated and given in this video.) Tabulated cost indexes may vary with region, type, etc. The development of cost indexes requires the actual cost at different times for a prescribed quantity and quality of the item. The base time (or period) is a selected time when the index is defined with a basis value of 100. The index each period is determined as the cost divided by the base-period cost and multiplied by 100. The division is a rate, so the 100 will give you the percentage. I just uploaded an example to my drive: drive.google.com/file/d/1-MjEg7HzwbFNK5jHZrqSd6b2wumoE8WS/view?usp=share_link. Hope it helps!

[@debankanmitra2425]

@@sc_maldonado thank you so much for helping me out , i really appreciate your effort ❤🙏

[@sc_maldonado]

@@debankanmitra2425 my pleasure! Let me know if you have further questions.