Engineering Economic Analysis

ENGINEERING ECONOMIC ANALYSIS

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Topics to Be Covered in Today’s Lecture  General Intro About the course  Chapter 1 Foundation of engineering economics  Chapter 2 Time value of money & Economic Equivalence

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About the course:  This course deals with the application of economic analysis models for making decisions between alternatives.  In particular we approach problem solving by considering the time value of money.  In general, a rupee of revenue or expense today is not equivalent to a rupee of revenue or expense three years from now.  Concepts in this class are equally applicable to engineering, business and financial systems problems.

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Text and Reference Books 1. Contemporary Engineering Economics by Chan S. Park

2. Engineering Economy by William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

3. Engineering Economic Analysis by Donald G Newman,Ted G. Eschenbach & Jerome P. Lavelle

4. Engineering Economy By Leland Blank & Anthony Tarquin, 7th Ed

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Course Objectives To provide engineering student with the knowledge of basic concepts of engineering economics as a decision making tool to select the suitable alternatives for engineering projects.

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Intended learning outcomes: 

At the end of this course, you should be able to: •

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have acquaintance with the subject of economic analysis, i.e. be able to formulate the problem, analyze it, search for alternative solution, select the preferred solution. have a mastery of the notion of time value of money including the concepts of present worth, future worth, annuities, gradient series. be familiar with methods of measuring investment worth. be able to compare alternatives using the methods of measuring investment worth. have an acquaintance with the economic analysis used in the public sector projects. be able to include depreciation in economic analysis. be able to tackle reality issues and practical applications such as interest rates, inflation.

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Tentative Course Schedule Week

Topics Engineering Economic Analysis – CEM 518

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Introduction

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Foundation of Engineering Economics

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Time value of money and Economic Equivalence

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Development of interest formulas

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Development of interest formulas, Nominal and effective interest rate

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Payback period, Present Worth Analysis

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Future Worth Analysis, Rate of Return Analysis

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Economics analysis of public sector project

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Replacement / Retention Analysis

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Depreciation

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Inflation in engineering economics

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Decision under risk and uncertainty

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Tutorials

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Revisions 7

Other important comments: 1.

Student’s efforts: Besides class hours, every student should devote few hours a week to grasp the content of the book and the class notes, to work out the examples, and to do homework exercises.

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Assignments: The homework assignments will be announced in class and completed homeworks need to be submitted. Electronic versions will not be accepted. It is your responsibility to obtain the assignments if you miss class.

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Regular attendance is essential. Students who miss a class are responsible of all the work, notes, handouts, and assignments they miss.

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In order not to disturb the lecture, the students should always arrive on time and avoid leaving the class early. Furthermore, everybody is asked to keep cell phones off during class sessions and abstain from unnecessary and unauthorized conversation.

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