Engineering Study Guide: Engineering books and study guides: Financial: Decision making and display methods: the case of prescription and practice in capital budgeting.: An article from: Engineering Economist

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Decision making and display methods: the case of prescription and practice in capital budgeting.: An article from: Engineering Economist
	Authors: Dorla A. Evans, Shawn M. Forbes Publisher: Institute of Industrial Engineers, Inc. (IIE) Buy New: $5.95 as of 2/10/2012 21:03 MST details In Stock Seller: Amazon.com Format: HTML Language: English (Published) Media: Digital Pages: 8 ASIN: B00092USF6 Publication Date: September 22, 1993 Availability: Available for download now



Editorial Reviews: Product Description This digital document is an article from Engineering Economist, published by Institute of Industrial Engineers, Inc. (IIE) on September 22, 1993. The length of the article is 2310 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser. From the author: Surveys of businesses' capital budgeting practices reveal that the IRR is much preferred over the NPV as an investment decision making tool even though business scholars prescribe the NPV as theoretically optimal. Here practitioners' preference for the IRR is explained through ergonomics: the IRR is treated as a display method. As such it is more compatible with decision makers' expectations and therefore, is more cognitively efficient. Because the IRR is expressed as an interest rate, it more closely resembles an analog display, in which the IRR is simply compared to the required return. In contrast, the NPV is stated in dollars, resembling more a very precise digital display. Academicians should reorient their efforts from promoting the NPV to teaching methods to ameliorate the pitfalls of the IRR. Citation Details Title: Decision making and display methods: the case of prescription and practice in capital budgeting. Author: Dorla A. Evans Publication: Engineering Economist (Refereed) Date: September 22, 1993 Publisher: Institute of Industrial Engineers, Inc. (IIE) Volume: v39 Issue: n1 Page: p87(6) Distributed by Thomson Gale

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