Engineering Economy

1. ENGINEERING ECONOMY
(ECO101)

2. cLASS rULES
Punctuality and attendance
Respect for Peers and Faculty
Academic Integrity
Engagement
Devices on silent mode or turn off
Submission Deadlines
Classroom Environment
Professionalism
Feedback and Improvement
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3. Syllabus (1/3)
Define engineering economy and its importance in decision-making for
engineering projects.
Describe the basic concepts of interest, time value of money, and cash flow
diagrams.
Differentiate between different types of interest rates and their applications in
engineering economy.
Calculate the future value and present value of a single sum using appropriate
formulas.
Construct and interpret simple cash flow diagrams for engineering projects.
Apply the concept of interest rates to solve basic engineering economy
problems.
Recognize the ethical implications of financial decisions in engineering projects.
Develop an appreciation for the role of financial analysis in engineering design
and decision-making.
Demonstrate curiosity and a positive attitude towards learning about engineering
economy concepts.
Objectives:
Knowledge:
By the end of the lesson, students will be able to:
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Psychomotor:
By the end of the lesson, students will be able to:
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Affective:
By the end of the lesson, students will:
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4. Syllabus (2/3)
Introduction
Time Value of Money
Explain the concept of time value of money (TVM) as the principle that a sum of
money has a different value today compared to its value in the future.
Discuss the significance of interest rates, present value (PV), future value (FV), and
compounding.
Present the formula for calculating present value and future value.
Define cash flow and its importance in engineering economy.
Differentiate between cash inflows and cash outflows.
Introduce the concept of net cash flow.
Present examples of cash flow diagrams and how to identify inflows and outflows.
Explain the concept of incremental analysis and its role in decision-making.
Introduce the payback period method, where students learn to calculate the time
it takes for an investment to be recouped.
Present the net present value (NPV) method, outlining the process of calculating
NPV and its significance.
Subject Matter: Engineering Economy
Introduction:
This course will introduce you to engineering economics, which is the application of
economics and decision theory to the evaluation of engineering alternatives in planning,
developing, constructing, and managing engineering projects.
Lesson Outline:
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3. Cash Flow Analysis
4. Basic Economic Analysis Techniques

5. Syllabus (3/3)
Class participation during discussions and activities
Homework assignments
Group work
Quizzes
"Engineering Economy" by William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
"Contemporary Engineering Economics" by Chan S. Park
Assessments:
References:

6. INtroduction to
engineering economy
What is Engineering Economy?
Engineering economy is a branch of engineering
that deals with the economic aspects of decision-
making in engineering projects.
It involves analyzing the costs and benefits of
different alternatives to determine the most cost-
effective and efficient solutions.

7. Why is Engineering Economy
Important?
To know the best economic choice for the
project
Enables us to make informed decisions
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8. Key Concepts in
Engineering Economy
Time Value of Money
Cash Flows
Interest rates
Cost Analysis
Benefit Analysis
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9. TYPES OF ANALYSIS
Cost-benefit Analysis
Break-even Analysis
Sensitivity Analysis
Risk Analysis
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10. real-world applications
project selection product design
equipment replacement

11. What is the primary objective of engineering economy?
a) To maximize technical performance
b) To minimize project duration
c) To minimize project cost
d) To maximize financial benefit
ASSESSMENT

12. ENGINEERING ECONOMY
(ECO101)