Engineering Economy assists the engineer in making a wide range of decisions. These decisions involve the fundamental elements of monetary cash flow, time, value of money, project life and the interest rate. Engineering Economy calculates the net present worth, future worth, annual equivalent worth and the internal rentability of the cash flows of the alternatives under consideration. By applying these values in different ways, the most economical alternative can be identified. Calculation of these values for a cash flow takes into account the effective interest rate, inflation and the income tax payable.