1. ENGR 3360U
Unit 1
General Introduction to Engineering Economics
Dr. J. Michael Bennett, P. Eng., PMP,
UOIT,
Version 2013-I-01
2. Unit 1 – General Introduction to Engineering Economics
Change Record
2013-I-01 Initial Creation
2013-I-09 small edits
1-2 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
3. Unit 1 – General Introduction to Engineering Economics
Course Outline
1. Engineering Economics 10. Uncertainty and Risk
2. General Economics 11. Income and Depreciation
1. Microeconomics 12. After-tax Cash Flows
2. Macroeconomics 13. Replacement Analysis
3. Money and the Bank of 14. Inflation
Canada 15. MARR Selection
3. Engineering Estimation 16. Public Sector Issues
4. Interest and Equivalence 17. What Engineering should know
5. Present Worth Analysis about Accounting
6. Annual Cash Flow 18. Personal Economics for the
7. Rate of Return Analysis Engineer
8. Picking the Best Choice
9. Other Choosing Techniques
1-3 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
4. Unit 1 – General Introduction to Engineering Economics
Learning Objectives
Why should you take this course?
This course is a bird, right?
Engineering and economy
1-4 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
5. Unit 1 – General Introduction to Engineering Economics
Mottos
Time is money
An engineer is someone who can build for a
dime, what any damn fool can build for a dollar
There are three kinds of economists; those who
count and those who don’t
1-5 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
6. Unit 1 – General Introduction to Engineering Economics
Observation
How many filthy rich economists do you
know?
Do you think that Bill Gates would pass this
course? Would he even take it?
1-6 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
7. Unit 1 – General Introduction to Engineering Economics
Economics
The “dismal” science (Carlyle)
“founded” by Scottish philosopher Adam
Smith
“Wealth of Nations”
The “invisible hand” of the market place
1-7 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
8. Unit 1 – General Introduction to Engineering Economics
Carlyle’s snide quote
“Teach a parrot to say “supply and demand”
and you’ve got an economist”
“Give me a one-handed economist; all of
the others say <<on one hand…on the other
hand>>” Harry S. Truman
Is a Nobel category
1-8 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
9. Unit 1 – General Introduction to Engineering Economics
Roadmap for Chapter 1
1. Options and 6. Spreadsheet functions
Questions
7. Minimum attractive rate
2. Decision Making of return
3. Macro and Micro 8. Cash flows
Economics
9. Doubling times
4. Fundamental
Business Structures
5. Interest Rates
1-9 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
10. Unit 1 – General Introduction to Engineering Economics
What is the most important
Engineering Variable?
$ £ € ¥
1-10 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
11. Unit 1 – General Introduction to Engineering Economics
Why Engineering Economy is Important to Engineers
Engineers “design” and create
Designing involves economic decisions
Engineers must be able to incorporate
economic analysis into their creative efforts
Often engineers must select and execute from
multiple alternatives
A proper economic analysis for selection and
execution is a fundamental aspect of
engineering
1-11 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
12. Unit 1 – General Introduction to Engineering Economics
Engineering Economy
The art and science that involves:
Formulating,
Estimating and
Evaluating economic outcomes
Always concerned with the selection and
possible execution of alternatives given the
economic parameters associated with the
project
1-12 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
13. Unit 1 – General Introduction to Engineering Economics
Role of Engineering Economy in Decision Making
Decision making involves the estimation of
future events/outcomes
Engineering economy aids in quantifying past
outcomes and forecasting future outcomes
Engineering Economy provides a framework
for modeling problems involving:
Time
Money
Interest rates
1-13 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
14. Unit 1 – General Introduction to Engineering Economics
Two Concerns of Engineering
Engineers have the dual task of
determining:
1. What society wants (its needs), and
2. How best to combine econo
mic resources, processes, etc. to produce the
goods and services desired by society.
Efficiency: economic and physical
efficiency must be considered.
1-14 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
15. Unit 1 – General Introduction to Engineering Economics
Physical and Economic Efficiency
Physical efficiency
Measure of the success of engineering activity
in the physical environment; ratio of outputs to
inputs
Maximum physical efficiency ratio is 1 (or
100%)
Physical units include BTUs, kw-hours, etc.
1-15 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
16. Unit 1 – General Introduction to Engineering Economics
Economic efficiency
Ratio of value or worth to cost; must exceed 1
or 100%
Engineer must produce outputs that are most-
valued (of greatest satisfaction) by society
(economic efficiency)
1-16 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
17. Unit 1 – General Introduction to Engineering Economics
Evolution of Economic & Physical Efficiency
1950s 1970s+
Physical efficiency Economic Efficiency
ECONOMIC
SPHERE ECONOMIC
ENGINEERING SPHERE
(Economic SPHERE
efficiency) (Physical efficiency) ENGINEERING
SPHERE
Independent decision making
Significant overlap
1-17 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
18. Unit 1 – General Introduction to Engineering Economics
2 The Decision Making Process
1. Understand the problem – define objectives
2. Collect relevant information
3. Define the set of feasible alternatives
4. Identify the criteria for decision making
5. Evaluate the alternatives and apply sensitivity
analysis
6. Select the “best” alternative
7. Implement the alternative and monitor results
1-18 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
19. Unit 1 – General Introduction to Engineering Economics
2.1 Understand the problem - define objectives
Problems can be simple, complex or
intermediate
Are referred to as “opportunities”
Build a new model
Replace an old plant
Open up in a new territory
Must refine opportunities into metrics
(objectives)
1-19 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
20. Unit 1 – General Introduction to Engineering Economics
Project Objectives
Develop expertise in some area.
Become competitive
Improve productivity
Reduce costs
Modify an existing facility
Develop a new sales strategy
Develop a new product
1-20 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
21. Unit 1 – General Introduction to Engineering Economics
SMART Objectives
S = Specific
M = Measurable
A = Achievable
R = Realistic
T = Time-Limited
1-21 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
22. Unit 1 – General Introduction to Engineering Economics
Minor Characteristics of Objectives
They should be
verifiable
aligned
cast in terms of deliverables
comprehensible
single-ended
1-22 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
23. Unit 1 – General Introduction to Engineering Economics
Priorities of Objectives
Hand rank
Matrix
1-23 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
24. Unit 1 – General Introduction to Engineering Economics
Scoring Models
Can build various objectives into a scoring
model
1-24 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
25. Unit 1 – General Introduction to Engineering Economics
2.2 Collect Relevant Information
Objectives are metricized so start there
Money is a biggy
As is Interest Rates, Inflation Rate, etc
May need customer surveys (consider
Microsoft launching Windows-8)
1-25 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
26. Unit 1 – General Introduction to Engineering Economics
Example: Gassing up in Oshawa
Need to evaluate all prices on a daily basis
plus weekly plus monthly plus “externals”
Observations of a Shrewd Gas-upper
Morning BAD
Later in the evening best
South side normally lower than north end
1-26 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
27. Unit 1 – General Introduction to Engineering Economics
2.3 Define the Set of Feasible Alternatives
Do nothing (always a possibility)
Alternative A
Alternative B
………
Alternative n
1-27 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
28. Unit 1 – General Introduction to Engineering Economics
Opportunity Cost
What will it cost you by NOT doing
something?
Can be 1 thing: can be 1,000 things
For example, going to FEAS/UOIT
OC is flipping burgers at MickeyDs
1-28 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
29. Unit 1 – General Introduction to Engineering Economics
OC of going to Class
You could be flipping burgers at MickyDs
6*8*10 = $480/wk
35 week = 35*480 = 17,000
Your OPPORTUNITY COST IS $17,000
1-29 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
30. Unit 1 – General Introduction to Engineering Economics
2.4 Identify the Criteria for Decision Making
What is the most important criterion?
Normally, money but can be other things
(protection of the environment, exclusion of
a competitor into a new market, etc.)
1-30 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
31. Unit 1 – General Introduction to Engineering Economics
2.5 Evaluate the Alternatives
(apply sensitivity analysis)
Some parameters are key
Interest rates
Inflation rate
Canadian dollar rate
Demand expectation
Price of oil
SA varies these to see how the chosen
model reacts
1-31 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
32. Unit 1 – General Introduction to Engineering Economics
2.6 Select the “Best” Alternative
Be sure to state all assumptions and
constraints
When the project is done, we will do a post-
mortem
Needs these to justify decisions
For example, Tar Sands development:
assumed price of oil critical
1-32 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
33. Unit 1 – General Introduction to Engineering Economics
2.7 Implement the Best and Monitor
Do it
Check it
Do root cause analysis
1-33 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
34. Unit 1 – General Introduction to Engineering Economics
Time Value of Money
All firms make use of investment of funds
Investments are expected to earn a return
Investment involves money
Money possesses a “time value”
The “time value” of money is the most
important concept in engineering economy
1-34 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
35. Unit 1 – General Introduction to Engineering Economics
Performing An Engineering Economy Study
Engineering Economy Studies:
Define Alternatives
Do-nothing alternative – maintain the status quo
Define feasible alternatives – that can solve the problem
Define/estimate the current and future cash flows
Perform the analysis
Apply the tools and methods of engineering economy
Selection of the best alternative
Implement and monitor
1-35 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
36. Unit 1 – General Introduction to Engineering Economics
3 Macro and Microeconomics
Fundamental approach of Economics
Draw a circle
Inside, Microeconomics describes
Actions of individuals and groups in individual
markets (choice under scarcity, implications on
prices and demand)
Outside, Macroeconomics describes
Performance of national economies and their
policies (unemployment rate, overall level of
prices, GDP, prime rate, price of oil etc).
1-36 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
37. Unit 1 – General Introduction to Engineering Economics
Microeconomics
Comparative advantage
Supply and demand
Competition and the invisible hand
Efficiency and exchange
Profit
1-37 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
38. Unit 1 – General Introduction to Engineering Economics
Macroeconomics
Global supply and demand
Economic growth and living standards
Productivity
Recessions and expansions
Unemployment
Inflation
Money, Banks and Central Banking
1-38 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
39. Unit 1 – General Introduction to Engineering Economics
4 Fundamental Business Structures
1. Sole proprietorship
2. Partnership
3. Limited partnership
4. Corporation
1-39 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
40. Unit 1 – General Introduction to Engineering Economics
4.1 Sole Proprietorship
Business owned by one person
Easiest to start, least regulated
Owner keeps all of the profits BUT is
responsible for all debts
Owner has unlimited liability which means
that Loophole and Loophole can foreclose on
your house, Mercedes, wifey’s diamonds,
hubby’s Hummers, etc
1-40 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
41. Unit 1 – General Introduction to Engineering Economics
Characteristics of Sole Proprietorships
Cheapest and fastest to set up
All business profits are taxed as personal income
Owner has unlimited liability, extending to all of
her assets
Life of the firm is limited to the life of the owner
Transfer of ownership requires the sale of the
whole business to the new owner
Equity financing is limited to personal wealth of
the owner
1-41 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
42. Unit 1 – General Introduction to Engineering Economics
4.2 Partnership
Involves two or more owners. Here partners
run the company together
They also share all profits and losses, under
a pre-existing agreement
1-42 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
43. Unit 1 – General Introduction to Engineering Economics
Characteristics of Partnerships
Inexpensive, easy to form
General partners have full liability for debts
Partnership is dissolved when a partner dies
or withdraws
Difficult for partners to raise money
Management control resides only with the
partners
1-43 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
44. Unit 1 – General Introduction to Engineering Economics
4.3 Limited Partnership
Some of the partners are involved only as
investors
These are called limited partners
Are liable only up to the amount of their
investment
The daily running of the business is not
their concern
1-44 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
45. Unit 1 – General Introduction to Engineering Economics
Characteristics of Limited Partnerships
Limited partners have limited liability
LPs can withdraw at any time
LPs have no control over management of
the group
1-45 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
46. Unit 1 – General Introduction to Engineering Economics
4.1 Corporations
Corporations are owned by shareholders
Set up as an independent business entity
with clearly specified rights and obligations
Shareholders elect a Board of Directors
which is responsible for picking managers
to run the business in the best interests of
the shareholders
The corporation is a separate legal entity
which is responsible for its debts
1-46 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
47. Unit 1 – General Introduction to Engineering Economics
Corporations cont.
Humans and other legal entities (other
corporations, trusts) can hold shares in the
corporation
If no stockholders exist, can be a “non-
stock corporation”
Also a “membership corporations” Not-for-
profit corps such as churches, charities etc.
1-47 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
48. Unit 1 – General Introduction to Engineering Economics
Stocks
Can be closely held (private) or publicly
traded
“Traded” means traded on a stock exchange
or an “over-the-counter” market
1-48 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
49. Unit 1 – General Introduction to Engineering Economics
Characteristics of Corporations
Ownership of the corp is easily transferred
The corporation has unlimited life (oldest is
a Japanese company, 800 years old)
Shareholders’ liability is limited to amount
of shares held
Is almost the only way to run large
organizations (J exception!)
Is the easiest form to raise large amounts of
capital quickly (e.g.. Google)
1-49 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
50. Unit 1 – General Introduction to Engineering Economics
Corporate Finance (for all 4)
Capital Budgeting – what are the long-term
strategies the company should undertake?
Capital Structure – what is the best way to
raise long-term financing to make new
products
Working Capital Management – how does
the company manage its short-term cash
flow in order to pay people, suppliers etc
1-50 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
51. Unit 1 – General Introduction to Engineering Economics
Corporate Financing
Primary goal is to ensure that the return on
capital exceeds the cost of capital without
taking big risks
Goal is to enhance corporate value
1-51 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
52. Unit 1 – General Introduction to Engineering Economics
5 Interest Rates and Rate of Return
Interest – the manifestation of the time value of
money
Rental fee that one pays to use someone else’s
money
Difference between an ending amount of money and
a beginning amount of money
interest accrued per time unit
Interest rate (%) = x 100%
original amount
1-52 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
53. Unit 1 – General Introduction to Engineering Economics
Rate of Return
Interest earned over a period of time is expressed as
a percentage of the original amount, specifically;
interest accrued per specific time period
Rate of return (%) = X100%
original amount
Borrower’s perspective – interest rate paid
Lender’s perspective – interest rate earned
1-53 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
54. Unit 1 – General Introduction to Engineering Economics
Economic Equivalence
Different sums of money at different times
may be equal in economic value $106 one
year from now
0 1
Interest rate = 6% per year
$100 now
$100 now is said to be equivalent to $106 one year from now, if
the $100 is invested at the interest rate of 6% per year.
1-54 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
55. Unit 1 – General Introduction to Engineering Economics
Simple and Compound Interest
Simple Interest:
Interest = (principal)(number of periods)(interest rate)
Compound Interest:
Interest earns interest on interest
Compounds over time
Interest = (principal + all accrued interest) (interest
rate)
1-55 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
56. Unit 1 – General Introduction to Engineering Economics
Terminology and Symbols
P = a present sum of money at a time
designated as t = 0 { t represents time}
F = a future amount of money at some
point in time later than t = 0
A = a series of equal, end-of-period cash
flows
n = the number of interest periods
i = the interest rate or rate of return per
time period, in percent
1-56 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
58. Unit 1 – General Introduction to Engineering Economics
7. MARR (Minimum Attractive Rate of Return)
Investors expect to earn a return on their
investment (commitment of funds) over time
We expect to see economic efficiencies
greater than 100%
A profitable investment should earn (return)
funds in excess of the investment amounts
Economic projects should earn a reasonable
return, which is termed:
MARR – Minimum Attractive Rate of Return
Also termed the “hurdle” rate for an investment
1-58 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
59. Unit 1 – General Introduction to Engineering Economics
The MARR
The MARR is established by the financial
managers of the firm
The MARR is expressed as a percent value
Most, if not all, projects should earn at a
rate equal to or greater than the established
MARR
MARR’s are set based upon:
The cost of all types of capital
Allowance for risk
1-59 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
60. Unit 1 – General Introduction to Engineering Economics
Types of Financing
Equity Financing – the firm uses funds
either from retained earnings, new stock
issues, or owner’s infusion of money
Debt Financing – the firm borrows funds
from outside sources
The cost of debt financing = the interest rate
charged on the debt (loan) amounts
The MARR is approximated from the
weighted average cost of all sources of
capital to the firm
A firm’s ROR > MARR > cost of capital
1-60 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
61. Unit 1 – General Introduction to Engineering Economics
8 Cash Flows: Their Estimation and Diagramming
Definition of terms
Cash Inflows - amount of funds flowing into
the firm
Cash Outflows – amount of funds flowing out
of the firm
Net Cash Flow equals
Cash inflows – cash outflows
Assumption for analysis – end of period
Funds flow at the end of a given (interest)
period
1-61 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
62. Unit 1 – General Introduction to Engineering Economics
Cash Flow Diagrams
A typical cash flow diagram might look like:
1. Draw a time line
0 1 2 … … … n-1 n
One time period
2. Show the cash flows
Always assume end-of-period
cash flows!
0 1 2 … … … n-1 n
Cash flows are shown as directed arrows (+ for up or – for down) ---
(+) inflow; (-) outflow
1-62 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
63. Unit 1 – General Introduction to Engineering Economics
9 Course Assumptions
Fallacy of linearity
Show me a linearity in nature!
Pointy-Haired-Boss and St Dilbert
PHB e.g.
One woman creates a baby in 9 months
Nine women create one in 1 month!
Assumption of homo economicus
1-63 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
64. Unit 1 – General Introduction to Engineering Economics
Guestimation
Engineers must do this all the time
How many dogs are there in Canada?
Interpolation si; extrapolation non!
Rule-of-six
Estimation accuracy
Estimation of SD
1-64 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
65. Unit 1 – General Introduction to Engineering Economics
Rule of 72: Estimating Doubling Time
Common question:
Estimate the number of time periods it takes for a
cash flow to double in size
Given an interest rate i% per period
The approximate time n for an investment at time
t = 0 to double in value is given by:
n = 72/i
e.g., $10,000 at 7% per year doubles to $20,000 in
10.3 years
1-65 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
66. Unit 1 – General Introduction to Engineering Economics
Economists you should Know
Adam Smith (invisible hand man)
Karl Marx (boo-hiss)
Alfred Marshall (2 blades of the scissors)
John Maynard Keynes (when in doubt,
SPEND)
Milton Friedman (Chicago - yea)
Paul Samuelson (ol’ guns and butter)
Ben Bernanke (chair of the US Fed)
Paul Krugman (contrarian)
1-66 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco
67. Unit 1 – General Introduction to Engineering Economics
Chapter Summary
Engineering Economy – application of economic
factors and criteria to evaluate alternatives
Applies the time value of money
Application of economic equivalence
Introduction of the MARR
Cash flow estimation
Modeling – cash flow diagrams
Difficulties in estimation
Perspectives – viewpoints taken
1-67 2013-I-01 Dr. J.M. Bennett, P.Eng., PMP ENGR 3360U Eng Eco