Course: EW464 Engineering Economics
3 Credits – 3 Recitation Hours – 0 Laboratory Hours
Course Description:
This course provides a survey of material relevant to financial intertemporal decision making for engineering activities. Components of this course include traditional engineering economy topics; fundamentals of accounting and cash flow analysis, interest factors, a comparison of economic alternatives, effects of depreciation and capital budgeting, decision analysis, value of information & options applicable to the management of technical organizations. The skills used will be applied to a term project.
Pre-requisites:
1/C ERC or ERCH major, or Dept Chair Approval.
Course Coordinator:
Prof. Piper
Textbook:
Newnan, Eschenback, Lavelle, Engineering Economic Analysis, 14th Edition
Course Objectives:
This course is designed to provide students with the knowledge and tools to systematically define, analyze, and make sound decisions for various engineering economic problems. Specifically:
a) The student should be able to define and use cost concepts, modelling, and estimating to describe project costs and benefits.
b) The student should be able to define and solve problems using the time value of money, equivalence, simple and compound interest, single and uniform series, different time periods to determine cost, benefit, worth, and rate of return analysis.
c) The student should be able to measure and consider uncertainty and risk when making economic decisions.
d) The student should be able to describe and distinguish between depreciation, deterioration and obsolescence. The student should be able to calculate annual depreciation charge to account for capital gains/losses, ordinary losses and depreciation recapture due to the disposal of a depreciated business asset.
e) The student should be able to develop and use cash flows that inflate at different interest rates and cash flows subject to different interest rates per period and use this information to explain the effect of inflation on purchasing power.
f) The student should be able to use spreadsheets, financial functions, algebraic equations and interest & depreciation tables to model and solve engineering economic analysis problems.
g) The student should be able to demonstrate through a comprehensive project the assimilation of all the course objectives to make an engineering analysis
Topics:
Economic Decisions
Costs and Cost Estimating
Interest & Equivalence
Equivalence for Repeated Cash Flows
Present Worth Analysis
Annual Cash Flow Analysis
Rate of Return Analysis
Choosing Best Alternative
Other Analysis Techniques
Uncertainty/Risks
Inflation
Inflation
Taxes
Replacement Analysis
Government Contracting