MANAGERIAL AND ENGINEERING ECONOMY.

By Prof. George A. Taylor(Thayer School). Princeton, N. J.: D. VanNostrand Co., Inc., 1964. 487 pp. $10.00.

This book represents an unusual combination: a text book for students and a handbook for businessmen. It has been successfully used by a variety of students- Dartmouth undergraduates, engineering students at the Thayer School, and business participants in Professor Taylor's executive programs.

In an understandable manner, the book brings together materials which stem from three distinctive sources. Beginning in the 1920's and 1930's courses in engineering economy focused on the annual cost of alternative investments, particularly those in new machinery and equipment. Annual cost was calculated by recognizing the time-value of money (i.e., a dollar received today is of greater usefulness than a dollar to be received five years from today). But little attention was given to the cost of capital itself, or to applying the same process to other economic problems.

Following World War II the analytical structure, developed in engineering schools, was broadened in schools of business. A host of investment and pricing decisions were considered. Although essentially the same method of analysis was used, businessmen favored a measure expressed as a percentage return on investment rather than as an annual cost. More recently, economists have proposed a theory for determining the cost of capital.

Professor Taylor has successfully integrated past work and advanced it. There is an interesting chapter on the analysis of public investment decisions. While earlier works treated alternatives as given (buy either machine A or machine B), Taylor emphasizes the problem of identifying all possible alternatives. These might include leasing as well as buying, or purchasing rather than making the desired product.

The book uses only elementary algebra, supplemented by simple graphical represen- tations. There are approximately 400 short problems and an appendix of rate-of-return factors.

Businessmen and public officials should find this book a valuable addition to their professional libraries.

Prof, of Accounting, Amos Tuck School