In explaining the principles and techniques needed for making decisions about the acquisition and retirement of capital goods by industry and government, this volume stresses two basic points: firstly, it is the prospective differences between alternatives that are relevant in their comparison and secondly, the fundamental question regarding a proposed investment in capital goods is whether the investment is likely to be recovered along with a return commensurate with the risk and consistent with the return that could have been obtained from other opportunities. To make the learning of the basic principles intriguing, this text provides a large number of problems at the end of each chapter, with answers given to about one-quarter of them. Students are therefore able to check their progress as they go. This new edition features 476 problems, more than half of which are entirely new or substantially modified.