Capital investments consume approximately 20% of the annual GNP of developed countries. It is therefore important to allocate capital funds to such projects in the most effective and efficient way. This text presents the techniques needed by engineers of all disciplines and by managers at every organizational level to participate in the process through which capital projects, both in the public and private sectors, are selected (or should be) for implementation. The techniques are grounded in a management science known as engineering economics. They have been refined and further developed by the application of probability theory. There are problems at the end of each chapter for