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Terms used in engineering economics have standard definitions and interpretations. Which one of the following statements is $INCORRECT$?

  1. The profitability measure 'return on investment' does not consider the time value of money
  2. A cost index is an index value for a given time showing the cost at that time relative to a certain base time
  3. The 'six-tenths factor rule' is Used to estimate the cost of an equipment from the cost of a similar equipment with a different capacity
  4. Payback period is calculated based on the payback time for the sum of the fixed and the working capital investment
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