BPSU-Module-01 GECO0313 EEcon - Alboro 2021

CM-GECO
0313
Course Module
Engineering Economics
Knowledge Area Code : BSIE

Course Code : GECO0313
Learning Module Code : CM-GECO0313
Engineering Economics
Course Module
First Edition, 2020
Copyright. Republic Act 8293 Section 176 provides that “No copyright shall subsist in any work of the
Government of the Philippines. However, prior approval of the government agency or office wherein the
work is created shall be necessary for the exploitation of such work for a profit. Such agency or office
may, among other things, impose as a condition the payment of royalties. “
Borrowed materials included in this module are owned by their respective copyright holders. Every effort
has been exerted to reach and seek permission to use these materials from their respective copyright
owners. The University and authors do not claim ownership over them.
Published by the Bataan Peninsula State University

President: Gregorio J. Rodis, PhD
Course Module Development Team
Writers:
Writer 01 Engr. Ruevan, E., Alboro, MEM, LPT, PIE, Cluster Head
Evaluators:
Evaluator 01 Dr. John Ryan C. Dizon, PIE, Program Head

Evaluator 02 Engr. Nelson S. Andres, M.Eng. PEE, ACPE, CEA Dean
Quality Management Team:
Arlene I. Pascual
Focal Person, University Gender and Development
Cristina G. Rivera
Chair, Oversight Committee on Curriculum Development
Arlene D. Ibañez
Chair, Oversight Committee on Textbook and Instructional Materials
Jesselyn C. Mortejo, EdD

Director, Quality Assurance Office
Emmanuel C. Macaraeg, PhD, CESE

Vice President for Academic Affairs
Course Module: Engineering Economics ii

Netiquette Guide for Online Courses
It is important to recognize that the online classroom is a classroom, and certain behaviors are
expected when you communicate with both your peers and your instructors. These guidelines
for online behavior and interaction are known as netiquette.
Security
Remember that your password is the only thing protecting you from pranks or more serious
harm.
• Don't share your password with anyone.
• Change your password if you think someone else might know it.
• Always log out when you are finished using the system.
Appearance
Bear in mind that you are attending a class, dress appropriately.
General Guidelines
When communicating online, you should always:
• Treat your instructor and classmates with respect in email or any other communication.
• Always use your professors’ proper title: Dr. or Prof., or if in doubt use Mr. or Ms.
• Unless specifically invited, don’t refer to your instructor by the first name.
• Use clear and concise language.
• Remember that all college-level communication should have correct spelling and grammar
(this includes discussion boards).
• Avoid slang terms such as “wassup?” and texting abbreviations such as “u” instead of
“you.”
• Use the prescribed font Palatino Linotype and use a size 10-point font.
• Avoid using the caps lock feature AS IT CAN BE INTERPRETED AS YELLING.
• Limit and possibly avoid the use of emoticons like :) or J.
• Be cautious when using humor or sarcasm as the tone is sometimes lost in an email or
discussion post and your message might be taken seriously or sound offensive.
• Be careful with personal information (both yours and others).
• Do not send confidential information via e-mail.
Email Netiquette
When you send an email to your instructor, teaching assistant, or classmates, you should:
• Use a descriptive subject line.
• Be brief.
• Avoid attachments unless you are sure your recipients can open them.
• Avoid HTML in favor of the plain text.
• Sign your message with your name and return e-mail address.
• Think before you send the e-mail to more than one person. Does everyone need to see your
message?
• Be sure you want everyone to receive your response when you click, “reply all.”
• Be sure that the message author intended for the information to be passed along before you
click the “forward” button.
Course Module: Engineering Economics iii

Message Board Netiquette and Guidelines

When posting on the Discussion Board in your online class, you should:
• Make posts that are on-topic and within the scope of the course material.
• Take your posts seriously and review and edit your posts before sending them.
• Be as brief as possible while still making a thorough comment.
• Always give proper credit when referencing or quoting another source.
• Be sure to read all messages in a thread before replying.
• Don’t repeat someone else’s post without adding something of your own to it.
• Avoid short, generic replies such as, “I agree.” You should include why you agree or add
to the previous point.
• Always be respectful of others’ opinions even when they differ from your own.
• When you disagree with someone, you should express your differing opinion in a
respectful, non-critical way.
• Do not make personal or insulting remarks.
• Be open-minded.
(Source: http://teach.ufl.edu/wp-content/uploads/2012/08/NetiquetteGuideforOnlineCourses.pdf)
Course Module: Engineering Economics iv

About the Faculty
About the Faculty
Good day class!
My name is Engr. Ruevan Evangelista Alboro, MEM, LPT, PIE, and your instructor for this
class. I am a graduate from the different programs such as Bachelor of Science in Industrial
Engineering (BSIE) on April 12, 2000, at Polytechnic University of the Philippines (PUP), Bataan
Branch; Master in Engineering Management (MEM) on July 14, 2017, at Bataan Peninsula State
University (BPSU) Main Campus Graduate School and Certificate in Professional Teaching
Program (CPTP) on June 22, 2019, at BPSU GS also.
I had my work experiences from industries from 2000 to 2012 and teaching career from 2012
up to the present. My twelve years from companies taught me a lot based from the different
positions and companies I had, namely: Office Trainee at Essilor Manufacturing Philippines,
Inc. for two (2) months in Mariveles, Bataan; Junior Production Assistant rank-3B at General
Affairs Department in Mitsumi Philippines, Inc. in Mariveles, Bataan for one and half months;
Jr. Production Assistant rank 3B also but this time in Switching Power Supply Department for
5 months still in MPI; Office Assistant rank-4 (supervisory level) still at SPS Dept in MPI for
two (2) years and one (1) month; Customer Service, Senior Customer Service, and Customer
Service Executive at Kyocera Asia Pacific Pte Ltd. In Madrigal Business Park, Ayala Alabang,
Muntinlupa City for four (4) years; Dakki Consultant and Dakki Branch Manager (dealership)
in Dakki Classics Concepts, Inc. at San Fernando Pampanga branch and an Accounting Staff at
Bahrain Fiberglass International Co., Ltd. in Mariveles, Bataan for six (6) months.
While, my noble teaching profession started on November 5, 2012, until May 31, 2018, in
Polytechnic University of the Philippines, Bataan Branch and at present, I am attending my
classes as a faculty member here in Bataan Peninsula State University-Main Campus in Balanga
City, Bataan from July 9, 2018, up to present.
After gathering my work exposures from different industries and sharing my skills and
knowledge with my students, I might say that the industrial engineering profession honed my
abilities as a person and as an employee. Thus, I am here in your class so I can uplift our
department, Industrial Engineering, and share my knowledge with all of you, my students.
Let us enjoy our lessons and learn from them.
Course Module: Engineering Economics v

Table of Contents
Table of Contents
COURSE OVERVIEW 1
MODULE OVERVIEW 01 3
LEARNING MODULE 01: INTEREST AND THE TIME VALUE OF MONEY 6
Course Packet 1 Introduction 8
Lesson 1. Definitions 14
Lesson 2. Principles of Engineering Economics 15
Lesson 3. Engineering Economics and the Design Process 17
Lesson 4. Cost Concepts for Decision Making 20
Lesson 5. Present Economic Studies 25
Course Packet 2 Money-Time Relationships and Equivalence 38
Lesson 1 Interest and the Time Value of Money 41
Lesson 2 The Concept of Equivalence 46
Lesson 3. Cash Flows 47
MODULE OVERVIEW 02
LEARNING MODULE 02: ENGINEERING ECONOMIC PRINCIPLES AND METHODS
Course Packet 3 Economic Study Methods
Lesson 1 The Minimum Attractive Rate of Return
Lesson 2. Basic Economic Study Methods: Present Worth, Future
Worth, Annual Worth, Internal Rate of Return,
External Rate of Return
Lesson 3. Other Methods: Discounted Payback Period, Benefit/
Cost Ratio
Course Module: Engineering Economics vi

MODULE OVERVIEW 03
LEARNING MODULE 03: THE BASIC ECONOMIC DECISION-MAKING CONCEPTS

Table of Contents
Course Packet 4: Decisions Under Certainty
Lesson 1. Evaluation of Mutually Exclusive Alternatives
Lesson 2. Evaluation of Independent Projects
Lesson 3. Effects of Inflation
Lesson 4 Depreciation and After-Tax Economic Analysis
Lesson 5 Replacement Studies
Course Packet 5: Decisions Recognizing Risk
Lesson 1 Expected Monetary Value of Alternatives
Lesson 2 Discounted Decision Tree Analysis
Course Packet 6: Decisions Admitting Uncertainty
Lesson 1 Sensitivity Analysis
Lesson 2 Decision Analysis Models
Course Module: Engineering Economics vii

Course Overview
Course Overview
Introduction
Technology, Engineering, and Modern economy are pillars of our advanced society, each one
is a by-products and factors to the progress and complexity of the world we know today. We
could conclude that most of the direction to further refine the process is driven by a financial-
gains. Thus, the main objective is to assist directly in the creation of profit for business entities
big and small alike.
Engineering Economics is the field of study of applied engineering concerned with the
production, consumption, and transfer of wealth for a single entity. This specifically concerns
all known factors affecting a single action of a decision-maker to have a greater monetary profit.
This course will provide basic general guidance that can be used in any enterprising project or
proposal. Applicability of the concepts is not limited to big business acquisitions but can be
applied to the mundane everyday decision as long there are interpreted quantifiable benefits.
This course will cover the following set of knowledge sets:

• Concept of the time value of money and equivalence
• Basic economy study methods
• Decisions under certainty
• Decisions recognizing risk
• Decisions admitting uncertainty
• Module 01: INTEREST AND THE TIME VALUE OF MONEY

• Module 02: ENGINEERING ECONOMIC PRINCIPLES AND METHODS
• Module 03: THE BASIC ECONOMIC DECISION-MAKING
Key Learning Competencies

01. Solve problems involving interest and the time value of money.
02. Evaluate project alternatives by applying engineering economic principles and
methods and select the most economically efficient one; and
03. Deal with risk and uncertainty in project outcomes by applying the basic economic
decision-making concepts.
Course Module: Engineering Economics 1

Course Details:
• Course Code: GECO0313
• Course Title: Engineering Economics
Course Overview
• No. of Units: 3 Units Lecture and 3 Hours Lecture per Week

• Classification: Lecture-based
• Pre-requisite / Co-Requisite: Second-Year Standing
• Semester and Academic Year: 1st Semester, AY 2021-2022
• Schedule: 8:00–9:30AM Wednesday & Friday IE Lec1- IE 3A and
9:30–11:00AM Wednesday & Friday IE Lec1- IE 3B
• Name of Faculty Engr. Ruevan E. Alboro, MEM, LPT, PIE
• Contact Details
Email: ruevanealboro@yahoo.com , ruevanealboro98@gmail.com
Mobile Number: 0906-4040-089 (globe), 047-935-7512 landline
Viber:
Messenger: Ruevan Evangelista Alboro
• Consultation
Day: Tuesday, Wednesday
Time: 5:00-8:00PM
Learning Management System

Google Classroom
Links shall be shared on the first day of the class during the orientation.
BSIE 3A Google Classroom link: https://classroom.google.com/c/MzQ1NDE2ODkxNTA2
BSIE 3B Google Classroom link: https://classroom.google.com/c/MzQ1NDE3MjEzMDY4
Assessment with Rubrics
Did Not Meet

Met Expectations Exceeded Expectations
Expectations
0-1 2-3 4-5
Problem Statement The problem statement The problem statement The problem statement
is vague. is specific and is specific and
measurable. measurable. The
background of the
problem was
discussed.

Analysis Data interpretation is Data interpretation is Data presentation is
inappropriate and/or appropriate and used appropriate and
uses incorrect the correct creatively uses the
Course Overview
methodology. Errors methodology. Use of correct methodology.

in analysis and proper analysis. Some Adequate message
computation. Little or message support support provided for
no message support provided by facts and key concepts by facts
provided for major visual aids; visual aids and visual aids; visual
ideas; visual aids are used adequately. aids used effectively.
missing or inadequate
or poorly used.
Conclusions/ Recommendations Provided feasible Provided feasible

Recommendations were not based on the recommendations recommendations
results of the analysis. based on the analysis. based on the analysis.
Specific the impact of
the recommendation
on the problem.
Presented the benefit
as well as cost/effort in
implementing the
recommendations.
Final Requirement with Rubrics

(Discuss the final requirement along with the corresponding rubrics.)
Grading System
Class Standing Percentage
Class Participation 30%
Attendance 10%
Major Course Outcome (Application) 60%
TOTAL 100%
Midterm Final
Class Standing - 70% Class Standing - 70%

Examination - 30% Examination - 30%
Final Rating
Midterm Grade (50%) + Final Grade (50%) = Final Rating

Course Policy
The following policies are to be observed and implemented inside the classroom by both the
Instructor and Students.
Course Overview
Attendance
• You are expected to attend class and participate in class discussions. This course involves
many team-oriented activities and projects conducted during class time.
• Attendance will be taken at every scheduled class meeting.
• Arriving late (fifteen (15) minutes after the official class starting time) constitutes a "tardy"
and two tardiness are considered as an absence.
• Should you miss a class, you are responsible for finding out what material or announcements
you may have missed.
• You will only be allowed to be excused from class only with the preapproval of the instructor
or with an acceptable, documented reason. Acceptable reasons include severe illness, family
emergencies, childcare issues, hospitalization, or other unavoidable events including
dangerous weather conditions and unavoidable transportation problems.
• Acquiring 7 consecutive absences for any reason during the semester may result in you being
dropped from the course without warning.
Assignments/Homework and Deliverables
• All assignments and deliverables must be submitted on time.

• Late homework and deliverable receive a 50% penalty. Homework/assignments or
deliverables are due when class begins.
• Missed assignment and deliverable due to unexcused absences will result in a score of 0.
• If you know you will be absent when an assignment or a deliverable is due, make
arrangements with the instructor for an early or alternate submission method. However, he/she
must present valid documents such as a doctor’s note before his/her work may be accepted.
• Likewise, if you missed submitting assignments or deliverable because of some unavoidable
circumstances, the student must present valid documents to defend his/her case.
Seatwork, Quizzes, and Term Examination
• Seatwork or quizzes will be given 15 minutes after the official class time.
• There will be one midterm exam and an oral project presentation for the final exam
depending on the activities.
• No makeup or late seatwork or quizzes will be given unless it is a valid or an acceptable
reason.
• Missed seatwork and quizzes due to unexcused absences will result in a score of 0.
• If you know ahead of time that you won’t make the quiz or exam, discuss the matter with the
instructor; arrangements can usually be made.
• Likewise, if you missed a quiz because of some unavoidable circumstances, the student must
present valid documents to defend his/her case.

Use of Electronic Devices in Class
• The use of cellular phones and other electronic gadgets during class hours is prohibited
Course Overview
unless the instructor permitted you to use it;

• All cellular phones must be on silent or vibrate mode. It should be only used for emergency
purposes. It should not always be around while in the classroom otherwise it will be
confiscated and will be turnover on the dean’s office and return only after the permission of
the dean of the college.
• Other electronic devices that will divert your attention should be turned off and keep inside
your bag or pockets unless it is permitted by the instructor.
• Laptops must be shut and phones and other electronic devices must be put away during
exams and quizzes.
Support for Students with Special Needs and Disabilities
• If you have a physical or learning disability that will make it difficult for you to do the course
work or that will require academic accommodations to be provided, please see the Guidance
Office or contact (047) 237- 6450 as soon as possible.
• If you come from a low-income family, consider contacting the Office of Scholarship Affairs
and Services (047)237-1385. They may be able to give you additional assistance.
• Likewise, students who potentially require emergency medical attention due to any chronic
health condition are encouraged to disclose this information to a guidance counselor within
the first two weeks of class. The guidance counselor can be contacted by calling (047) 237-6450
or by visiting the Guidance Office.

LM01-GECO
0313
Module Overview
Module Overview
Introduction
This module is the introductory part of the course where we will tackle the engineering
economy overview and classical model that is universal as basic to understand the business
impact. At first, Module 01 provides the basic concept through a discussion of related
definitions and principles. This will provide the parameter of which the entire subject would
cover. Module 02 provides a presentation about the reality of monetary impacts and concepts
that is intertwined to execute and continue a project or endeavor in an actual business scenario.
Module 03 with the knowledge and knowhow of Module 01 and Module 02 the current module
would tackle and focus the discussion on a guide in sound decision-making concept related to
business activities.
• Course Packet 01: Introduction

• Course Packet 02: Money-Time Relationships and Equivalence
Learning Outcomes
At the end of the discussion, the students will be able to:
Knowledge: Familiarize and understand the interest and the time value of money in solving
problems.
Skills: Demonstrate the ability to use the interest and the time value of money in solving
problems.
Attitude: Appreciate the ability to use the interest and the time value of money in solving
problems.
Minimum Technical Skills Requirement

The learner should have an inquisitive mind, technical competency, listening skills,
resourceful, patience, continuous desire to learn, strong time management skills can interact
with a diverse group of individuals, leadership skills, and excellent communication as
connected to required completed knowledge of courses such as Principles of Economy and the
like.

Google Classroom and Schoology.
BSIE 3A Google Classroom link: https://classroom.google.com/c/MTE3NzY5OTY2MjM3
BSIE 3B Google Classroom link: https://classroom.google.com/c/MTE3NzcwMzQyMjY3

Duration
The number of hours allotted for this module: (13 Hours Lecture)
• Course Packet 01: Introduction = 7 hours
Module Overview
Lesson 1 Definitions
Lesson 2 Principles of Engineering Economics
Lesson 3 Engineering Economics and the Design Process
Lesson 4. Cost Concepts for Decision Making
Lesson 5. Present Economic Studies
• Course Packet 02: Money-Time Relationships and Equivalence = 6 hours

Lesson 1 Interest and the Time Value of Money
Lesson 2 The Concept of Equivalence
Lesson 3 Cash Flows
(Lecture) TOTAL = 13 hours
(For Lecture: 9 hours self-directed learning with practical exercises and 4 hours assessment)
Delivery Mode
Online Learning:
1. Synchronous = online classroom in real-time; and
2. Asynchronous = learning modules and educational packets
Module Requirement with Rubrics

(Discuss the final requirement along with the corresponding rubrics.)

Course
LM01-GECO
Packet
01 0313
Learning Module 01
Interest and the Time

Value of Money
Course Packet 01
Introduction

Learning Module Code : LM01-GECO0313
Course Packet Code : LM01-GECO0313-01

Course
Packet
LM01-GECO
01 0313
Course Packet 01
Course Packet 01
Introduction
Introduction
This module provides the basic definition of technical terms related to the discussion of
Engineering Economics, thus providing a definitive meaning and use of the specific term.
Providing in advance the common specialized definition will prepare each student mindset of
the coverage of the session and which will reduce confusion, especially in online discourse.
Learning Outcomes
problems.
problems.
problems.

Duration
The number of hours allotted for this course packet: (7 Hours Lecture)
• Course Packet 01: Introduction = 7 hours
Lesson 1 Definitions
Lesson 4. Cost Concepts for Decision Making
Lesson 5. Present Economic Studies
Delivery Mode
Online Learning:

Course
Packet
LM01-GECO
01 0313

Course Packet 01
Did Not Meet

Expectations
0-1 2-3 4-5
background of the
problem was
discussed.

or poorly used.

the recommendation
on the problem.
implementing the
recommendations.
Requirement with Rubrics

(Discuss the requirement along with the corresponding rubrics.)
Readings
Links for reading materials shall be shared on the first day of the class during the orientation.
1. PowerPoint presentation for the whole course packet 01 Introduction of Engineering

Course
Packet
LM01-GECO
01 0313
Economics to be uploaded on the 1st day of class.

Supplemental reading for the students to enjoy watching and understanding:
2. Vidya Vikas Institute of Engineering and Technology. Module-4: Introduction to
Course Packet 01
Engineering Economy, Interest, and Time Value of Money and Comparison of

Alternatives by Dr. Vinay Kumar, BM. 2018.
3. Dario Jr, Calaque. Engineering Tutorials. Introduction to Engineering Economics. 2020.
4. Topperly. Introduction to Economics/ Engineering Economics. 2019.
5. Ameen San. Engineering Economy. 2014.
6. Nguyen, Quang. Engineering Economics Module 2-Time Value of Money (Continued).
Michigan State University. 2018.
7. Seiko Epson Corporation. Reconciliation of Liabilities arising from Financing
Activities. Annual Report 2019. Page 94. 2019.
8. Castillo, Jonathan. Epson named number one ink tank vendor in PH-IDC. 2020.
9. Fraser, Niall M., and Jewkes, Elizabeth M. Engineering Economics. Financial Decision
Making for Engineers. Fifth Edition. Pearson. 2013.
Key Points:
Major Components of the Learning Module
• Principles of Economic
Introduction
Definition of Terms:
This first part of the course packets deals with the definitions to
familiarize the student with the common financial terms
focusing on business engineering costs. Principles of Economic.
deals with broad
discussion related to the
impact of industrial
Pre-Assessment
engineering solutions in a
A multiple-choice type of pre-assessment will be uploaded on global, economic,
the 1st day of the class so that students can answer after the environmental, and social
orientation to evaluate their knowledge about the topics, and the standpoint. It covers basic
instructor will be dealing more with the shortage or topics which concepts of the economy
need more attention. from supply and demand,
international trade,
national indexes to
international monetary
Lesson Proper policy.
Do include the following:
• Review.
Engineering Economics (EE) VS Principles of Economics (PE)
Principles of Economic deals with broad discussion related to the impact of industrial
engineering solutions in a global, economic, environmental, and social standpoint. It covers
basic concepts of the economy from supply and demand, international trade, national indexes

Course
Packet
LM01-GECO
01 0313
to international monetary policy. The principle of Engineering Economy limits its environment
to a specific entity that defined engineering solutions are being presented in quantitative
monetary indexes.
Course Packet 01
The principle of Economy deals with high-level discussion on academic definitions and
studies of general concepts related to economic structure and the effect of collective action, on
the other hand, Engineering Economics handles actual micro-level alternatives to acquire and
sustain economic gains. However, prevailing economic status defines the alternatives and most
logical decision at that specific point of time.
Engineering Economics VS Financial Accounting
Financial Accounting provides the model and language of which the alternatives are being
presented in a corporate/business environment, both areas evaluate information as to the
usefulness in segment reporting with the controlled evaluation process. However, the
Engineering Economics presentation differs in forms and content depending on the magnitude
of which the project being presented. The presentation may need to conform with specific
formats provided by related professional standard and government reporting agencies or with
the mundane immediate decision on the operational level just an informal email.
Engineering Economics vs Managerial Accounting
Managerial Accounting in practice is identical to Engineering Economics about the selection

process of the best alternatives fitted for that specific situation, both fields operate on multi-
disciplinary environments.
Managerial Accounting differs as its focal point is to capturing cost factors in regular
operational cycles as part of the accounting system and normal business operation reports. It
provides basic data analysis for an individual job order with all the economic cost as a basis for
standard costing. The result does normally part of the benchmarking for alternatives but the
main uses are for monitoring and creation actionable plan for core department areas that
includes sales and production.
• Activity. Brief Stories
• In 2019 as reported Epson Seiko is the biggest printer supplier in Southeast Asia
bolstering a 34% leadership share in total market sales. This is the result of decade long Epson
forefront research for micro piezo printing technology, recently Epson announce a 400 billion
yen (3.76B USD) investment in research in the development of which some are haven finance

Course
Packet
LM01-GECO
01 0313
by the issuance of interest payment bonds which are declared in 2019 consolidated financial
statements. https://global.epson.com/IR/library/pdf/ar2019.pdf
Course Packet 01
• There are two offerings presented for 2020 Toyota Vios (A.) P55,000.00 initial cash and monthly
installment of P16000 and (B.) P85,000.00 down payment with monthly amortization of P14,500,
both are payable in 60 months which is more economical.
• Jack Tripper is the head of a family of six (6) members with four (4) children who have seen a
featured product in CBS 60 minutes a micro power plant using SOFC, solid oxide fuel cell
technology, created by Bloom Box. A complete unit can be purchased for $3000. The existing
utility company charge 12.5 cents per kWh, The cost of electricity to power up a new home
would be 8.0 cents per kWh. Compute years it would take for a bloom box to be a good
investment for the new homeowner. Use the present worth method to evaluate the single
project of micropower plants for individual homes. Assume that 600 kWh of electricity is
consumed every month at the Tripper residence. (i=10%)
• Jollibee 2015, with a projection of continuing growth in the fast-food business for the coming
decade, its top management initiated the plan to secure reliable chicken parts supply.
Approved general action is to expand by building a 45million annual processing capacity plant
locally. Initial talks with Cargill Joy Poultry, one of the major industrial poultry processing
plant company, is a P260 million joint venture plant. One of the company options is to issue
interest-bearing bonds to finance the proposed plan.
• As the owner of a garments company decided whether to retire three (3) units of sewing
machine for scrap at P2000 or refurbished at P25,000 that will extend its production life to
another 100,000 pcs each with possible repair/maintenance cost of P2500 each machine per
10000 pcs or buy new units at P25,000 each with factory stated production life of 650,000 each
and negligible maintenance cost. A credit line is open with the bank for 25% per annum payable
in 2 years.
.
• Processing of the Activity.
Detailed instructions will be given in Google classroom for different activities.


Course
Packet
LM01-GECO
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• Brief Lesson.
MODULE 01: INTEREST AND THE TIME VALUE OF MONEY

Course Packet 01
Course Packet 01 Introduction
Lesson 1 Definition of Terms
ENGINEERING ECONOMICS
the branch of knowledge concerned with the production, consumption, and transfer of wealth.
A focused study specializes in the implementation and "...application of economic principles"
in the resolution of engineering-related actions. As a discipline, it is focused on the branch of
economics known as microeconomics in that it concentrates with the specific individuals and
enterprises choosing decisions regarding the committing of limited resources.
Financial costs, as well as profits, are considered, for each alternative, for a given business
financial situation that is either a fixed number of years or the estimated life of the project. The
scrap value is set aside, but is recognized in accepted method, and is either the salvage value
of de-commissioning the project.
Collection financial formulas that simplify comparisons of alternatives on an economic basis.

Engineering economics is not a method or process for determining what is the correct
alternatives are.
Engineering economics also includes accounting practices for manufacturing concern, relevant
features for manufacturing concerns are process costing, batch costing, cost allocation, etc.
Engineering economics provides methods to justify the business actions that are to taken an
individual or voted decision of managers.
BUSINESS ALTERNATIVES
Set of quantifiable and comparable models of which the economic outcome will benefit the
enterprise or business entity. The outcome results in action that will result in a favorable status
or provide the least negative impact to the business entity.
The actual benefits of the models may vary due to the personal preference of the decision-
maker. For example, a manager chooses much costlier options to strengthen the market
position of the company.

Course
Packet
LM01-GECO
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Models that will result in subpar product output quality may be included as long as it satisfies
the minimum customer contract.
Course Packet 01
PRINCIPAL
The original sum of money invested or lent for the borrower may not equal to the amount of
money received due to some financial charges that are agreed to be deducted.
The principal is a term used for the current balance of any loan after interest and periodic
payment.
INTEREST
Additional money value is stipulated in the contract as a cost incurred for the use of money
due to time passing. Standard percentage computation is based on an annualized percentage
unless provided in the agreement or situation.
Concept, Time length for interest days is always based on the last payment date, by virtue, the
new principal is net of the last interest and payment.
Any additional value added to the net principal due to non-fulfillment of scheduled payment
will be considered as a penalty. The local law will dictate if the penalty or surcharge will be
subjected to interest payments too.

1. Develop the Alternatives
2. Focus on the Differences
3. Use a Consistent Viewpoint
4. Use a Common Unit of Measurement
5. Consider All Relevant Criteria
6. Make Uncertainty Explicit
7. Revisit Your Decisions
1. Develop the Alternatives

The official option is among the given selections. Models of alternatives should be presented
in priority order and then reassess for the second analysis.
Decision-makers' requirements should set aside alternatives that do not meet the basic law,
customer, and safety requirements of the business.
All the factors related to business should be presented and be subject to detailed evaluation.

Course
Packet
LM01-GECO
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Develop hierarchy criteria with a basic understanding of everything else comply with basic
laws and safety standards.
Be open-minded, allow out the box solution since it promotes openness, diversity, and
Course Packet 01
creativity.
Minimum criteria should be implemented if alternatives are too many and similar.
2. Focus on the Differences

Provide more weight on the differences of outcomes by presented alternatives.
Identical outcomes to all options should not be included in the comparison decision process
Identical results with different economic factors will be acted upon if the outcome has been
selected.
3. Use a Consistent Viewpoint

Specific criteria scoring should be implemented and applied to all alternatives being presented.
At all times decision-maker point of view and priority should be used.
Criteria should be laid out open to all and followed upon discussion.
4. Use a Common Unit of Measure

Implement general a common unit of measurement to list all the prospective outcomes as much
as possible it will make easier the analysis and comparison process.
One common relevant currency should be adopted to make the evaluation more relevant to the
decision-maker.
Outcomes should be quantified in a relatively stable monetary currency which is not restricted
for trade.
5. Consider All Relevant Criteria

Choosing a preferred alternative (decision making) requires the use of specific benchmark or
standards related to the desired outcome.
The decision-maker should not always focus on short term monetary gain. The discussion
should consider the option that will best serve the long-term interests of the enterprise.
Decision-maker choice should be considered the best alternative action based on overall
business strategies.
The decision-maker should consider any on-going or planned projects that will be affected by
the alternative being considered most suitable to the specific business criteria.
6. Make Risk and Uncertainty Explicit

Risk factor and God’s act events are an integral part of forecasting the future results and should
be included in the process.

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The creation of an acceptable probability forecast to guide the analysis of the options being
presented involves projecting the economic disturbance or losses with each of the options.
A business continuity plan should be crafted to mitigate the magnitude and the impact of
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future uncertain disadvantageous events.
7. Standard monitoring and benchmarks should be in place

7.1 Good decision-makers in a sound organization grow by accepting results and adapting
based on the option selected and use them as base experience
7.2 Flexibility and backup options are required because the best option presentation-selection
process does not guarantee 100% expected results or may in-variable result in negative long
term outcomes.

The applied engineering economy is done with the standard systemic procedure and
mathematical modeling alternatives. Possible solutions are then used in brainstorming events
that contain two or several alternative options and give more weight about reengineering
knowledge and input.
A comprehensive analysis includes the basic several procedures. These are accepted general
guidelines to make sure the selection process covers every aspect possible.
1. Engineering Problem its coverage (definition), recognition, and

evaluation.
Engineering Problem in this course means any modification to the current operational level to
reduce the cost of the business operation, this may involve simple process design change or
investment of new machines.
Guidelines for Problem Presentations

Specific Expectation and coverage problem outcome should be presented in standard forms
and documentation before the project team brainstorming. Specific requirements or expected
economic positive results required by the business entity should be presented to prevent
ambiguities. Expectations and problems presented will provide an overall direction and
mindset where the alternatives are created.
Acknowledgment and presentation of problems start with the communication of the internal
or external organization that needs modification.

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2. Creation Selection of viable alternatives.

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Limiting Factors of the alternatives

1. Violation of ethical standards, law, safety regulations
2. Experience and technical know-how of the troubleshooter and decision-maker
3. Geographical and logistics infrastructure of the actual problem
4. Financial capitalization
Elimination and selection process. The two main actions which are:
(1) Presentation of all potential project solutions technically possible solution
(2) Sorting feasible options in a small group for detailed analysis.
Searching for Best Solution Model

a. Pursue a standard model solution but encourage non-conformist option. In the
question for the best-fitted solution creativity and resourcefulness should be
encouraged as part of the mindset.
b. Emphasized that producing great alternatives are results largely of an individual’s or
group’s problem-solving collective skills.
Two Types of Brainstorming Approaches for Investment Alternatives

Rules for successful brainstorming:
1. Quantity and Diversity Driven Outcome: Any option submitted creates more ideas. By
default, nobody knows the best solution. The tried and tested method is the more options
provided, the larger the probabilities of producing the most effective solution.
2. Reserve Criticism: Criticism is withheld in the brainstorming process to encourage openness
and generating out of the box and near the edge possibilities, this encourages extending
varieties of a possible solution. Criticism is used intensively in a detailed evaluation process.
3. Accept Out of the box and radical ideas: Crazy ideas may be funny but the overall impact
will remove members’ anxieties and stress which will greatly help in generating new options.
4. Improve ideas by restructuring and combining other options.
(A). Classical brainstorming

Classical brainstorming is the most practiced and used technique for solution creation. A
classical brainstorming has the following basic steps:
1. Preparation. Selection of relevant personnel connected with the issue.
2. Brainstorming. Open the meeting by executing an ice breaker as a warm-up session. Provide
the specific problem then layout the four rules of brainstorming. Record ideas using a checklist
visible to all.

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3. Evaluation. It is the process of providing relevance to the idea presented, it may include
modification as deemed necessary by the decision-maker.
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(B) Nominal Group Technique (NGT).

Nominal Group Technique(NGT) The NGT involves a structured group meeting designed to
incorporate individual ideas and judgments into a group consensus. By correctly applying the
NGT, groups of people (preferably, 5 to 10) can generate investment alternatives or other ideas
for improving the competitiveness of the firm/Company. The technique, when properly
applied, draws on the creativity of the individual participant.
NGT Format
The basic format of an NGT session is as follows:
1. Individual silent generation of ideas
2. Individual round-robin feedback and recording of ideas
3. Group clarification of each idea
4. Individual voting and ranking to prioritize ideas
5. Discussion of group consensus results
The NGT session begins with an explanation of the procedure and a statement of question(s),
preferably written by the facilitator. The group members are then asked to prepare individual
listings of alternatives, such as investment ideas or issues that they feel are crucial for the
survival and health of the organization. This is known as the silent- generation phase. After
this phase has been completed, the facilitator calls on each participant, in a round-robin fashion,
to present one idea from his or her list.
Each idea (or opportunity) is then identified in turn and recorded on a flip chart or board by
the NGT facilitator, leaving ample space between ideas for comments or clarification. This
process continues until all the opportunities have been recorded, clarified, and displayed for
all to see. At this point, a voting procedure is used to prioritize the ideas or opportunities.
Finally, voting results lead to the development of group consensus on the topic being
addressed.
3. Present Individual outcome and cash flow analysis for each alternative.
Each alternative created should be presented with the forecasted quantitative effect in
monetary value. This would prevent false analysis and may show an option result would be in
reverse to the expected impact because of unforeseen factors. This would provide a clear
comparison idea to upon brainstorming discussion.

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4. Define specific a criterion or criteria

Listing of parameters underlying the selection of alternatives will provide visual guidelines of
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is the business problem that needs to be solved. Each criterion would provide a limitation of
the actions that are possible to be implemented.
5. Detailed analysis via comparison of alternatives

Every alternative should be examined with all possible factors affecting the decision the best
way is to compare this factor per alternative.
6. Process elimination of preferred alternatives

A system of results priority hierarchy should be implemented. This to provide a
quantitative logical selection process that will reduce selection due to biases.
7. Constant performance monitoring and post-appraisal of results.

a. To assist in any infrastructure lapses and recalibration
b. To execute a stop implementation in case that critical adverse operational impact has
been observed
c. To provide definite evidence that the alternative is working as predicted
d. To introduce final tweak for full normal operation integration
Lesson 4 Cost concepts in decision making

The definition of cost is the economic resources exchange for other entities ’ services or assets.
The monetary cost value concept is standard for determining the present and long term
viability of a solution. Cost concept management is an integral part of any enterprising entity’s
decision-making process. Different cost types will always be part of any alternative being
presented. These cost types determine the final decision if the option will be selected, it is a
must that upon presentation reasonable cost is included in the cost-profit analysis.
COST CLASSIFICATION
The technical, geographical, experience, financing options will dictate what cost an alternative
requires. Identical options with different locations might have different cost or capitalization.
1) Base on service period: a) Short-run cost b) Long-run cost

a.) Short-run Cost. This cost is used over a specific production run. These are the
cost incurred once and cannot be used again and again, such as payment of wages, cost

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of raw materials, etc. It may include fixed costs as long as it does not increase in cost
with the increase in production units.
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For example, Company producing face mask due to a recent pollution increase
observes a sudden peak increase demand for its products. To cope with the sudden
increase in order the company can increase its capacity by increasing production inputs
such as labor, materials, but overall factory floor size and the number of running
machinery cannot be altered. Short-run cost is normally treated as a variable cost since
it varies with output.
b.) Long-run Cost – does not include fixed costs related to production. Cost
related to big items such as machinery and land changes concerning long-run cost
analysis. Producers use this cost as part of the planning and implementation stage.
They analyze the current and projected state of the market to make production
decisions.
Long-run cost requires considerable planning and execution. Normally investment on
this kind is part of a major production upgrade that will affect the overall cost level of
the business.
Options such as operational shutdown, leaving or entering a new market, corporate
long term vision is part of Long-run cost.
2) Base on Production Volume: a) Fixed cost b) Variable cost

a.) Fixed cost is a regular expense by business operation in which is dependent on
periodic amount regardless of the quantity of production by the enterprise. These
are cost from land, warehouses, building most of the periodic cost application in
the current period is part of depreciation expense.
b.) Variable cost is economic resources directly consumed in the process of making a
product or needed to execute the service thus it increase or decrease along with
the production quantity. Mainly variable cost is from material and production
manpower or machine load per unit, it may include fixed asset cost per
depending on the business model.
3) Based on changes in total costs with certain specified volume: a) Total cost b)
Average cost b) Marginal cost
a) TOTAL COST is defined as TOTAL = TOTAL FIXED COST + TOTAL VARIABLE

COST is the business cost of producing a specific number of units or services

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including the non-direct cost as a whole. This assumes continuing normal

operation and the total period fixed cost is based on scheduled depreciation.
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b) AVERAGE COST this indicates per unit cost at the different capacity schedule. The
average cost per unit decreases as the production increases because the total fixed
cost does not change. Cost average per unit = Total Direct Variable Cost + Allocated
Fixed Cost Average. Note that if there are more products or income-generating
department fixed costs will be allocated among the product line.
c) MARGINAL COST The marginal cost is defined as the cost to produce the next
quantity. Formula Marginal Cost = Total Cost (Quantity2) – Total Cost (Quantity1)
Total Variable Cost does increase in amount with an additional number of units
being produce but the total amount is not proportional to the rate of increase of the
units, therefore the average variable cost fluctuates.
Why?
One sample: Let us assume that the extra unit would increase labor costs by 30%
due to overtime. Or a batch processing segment with 50 units needed but the last
group is only 3 items.
Marginal cost analysis is important and useful in the creation of peak production
timing of the lowest cost input.
4) Some other important classification of costs: a) Opportunity cost b) Implicit cost b)

Sunk cost
a) Opportunity Cost is the potential revenue earned not chosen because another
alternative has been selected.
b) Implicit/Imputed Cost is the term used for unrecorded consumed or expired

resources by the business and not reflected in the cost reporting process.
This normally came from personal out of pocket costs shouldered by the owner
such as 1. Out pocket payment for a product delivery 2. Time provided by the
owner without compensation 3. Use of machine, location, cars with no rental fee.
One time seller, startup, hobbyist, and small business enterprise usually have this
type of cost which clouding the true economic cost of a product or service and
initially provides a high gross margin profit, however, in the long run, this type of
cost prevents the entity to because of a self-sustaining entity.
c) Sunk costs are items or actions that have already been executed or purchase in the past
and which has no longer any related economic impact in the current alternative. One
sample for oil and gas is the investment that has been cashed out for drilling oils.

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This investment will not be counted in the site should no longer feasible for oil
production. Another example is taxes paid for the previous year's operation.
With managerial decisions, this cost is an irrelevant cost however the experience is
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not should play as base experience. Per cost computation, any salvage cost will be
considered as cash inflow relative to the options being deliberated.
COST TYPE BASE PROJECT DECISION MODEL

The goal of the entire course is to provide sufficient exposure to the cost models that the
students be used in projects or alternative selection. At the end of the day, the individual
will make a call of what factors needs to be included in the cost computation.
1. Relevant Costs
2. Irrelevant Cost
1. Relevant costs which shall be incurred in one option and avoided with the previous
system or different alternative. In general influence the decision-maker choice on
specific business setup.
Examples of relevant costs include:

• Future Cash Flows: Cash outlay directly related to the decision
• Avoidable costs: Expenses that will not be incurred on a given option,
• Opportunity costs: Forfeited economic profit by selecting another alternative,
• Incremental Costs: The change in overall cost in connection to choosing another
alternative.
2. Irrelevant costs are, either positive or negative to the overall impact of a specific option
but the overall recorded value is not affected by management action. Normally, this
type of cost is disregarded in the decision-making process some samples are fixed
overhead and sunk costs. Detection of irrelevant costs is important to potentially
maximize the profit or the enterprise.
• Irrelevant costs are an expense that is independent of a chosen path by management.
• Relevant costs are expenditures that are influenced directly by a business for the
selected option.
• Irrelevant expenses are those in which economic consumed stays the same in the future
regardless of the option executed.
• Examples of irrelevant historical costs are sunk costs, committed costs, and taxes
• Enterprise overheads are irrelevant costs because they cannot be avoided.
• There is no best answer for each project it will often be on a case to case basis.

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Understanding Irrelevant Costs

An important responsibility of project managers is grouping costs either irrelevant or relevant,
the profitability of different alternatives depends on this skill. Expenses incurred with the same
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amount using different alternatives are irrelevant to the actions being made.
This is because cost classification grouping differs on a case to case basis an irrelevant cost may
be a relevant cost in a different option. It is important to formally define and acknowledge
costs that should be removed from selection when reaching a business decision.
Knowing the difference between the two groups is a critical business decision. These costs can
either make your company maximized profit or shut down the company. The selection of
available options is very important to normal business operations.
Here are some examples :

• Shutting down an unprofitable division or segment of the business,
• Deciding giving lower or higher price for special order
• Sourcing-out a product from the third party or running it in the internal production
process,
• Disposing work-in-progress or allow to finished processing it.
Fixed costs are normally irrelevant because the monetary outlay is unchanged in any given
solution however salvage value is treated as a relevant cost.
Types of Irrelevant Costs

As stated fixed overhead expenditures and historical sunk costs are basic examples of
irrelevant costs that will not change a business action to shut down a department, or produce
the item in house versus sourcing it from a third party supplier.
Another example, machinery is broken and out of warranty or insurance coverage and cannot
be fixed, its book value will be treated as a sunk cost and would be irrelevant to the decision to
purchase a new one or initiate a Subcon from the supplier. Also, the salaries and benefits of
employees keep after the sale of a division would be irrelevant to the decision to sell it.
Fixed assets recorded book value applicable to machinery, equipment, and inventory is another
example of irrelevant sunk costs, that does not affect a decision involving its replacement or
the decision change the book value of the asset.
Some other list of irrelevant costs:

• Sunk costs: Expenses which are already incurred

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• Committed costs: Contract agreement for execution in the future

• Indirect Non-cash expenses: Application of currency depreciation and amortization
• General Overheads: Cost related to operation administration and management
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Irrelevant Costs vs. Relevant Costs

A relevant cost is any cost that will be different among various alternatives. There is seldom a
“one-size fits all” situation for relevant or irrelevant costs. This is why they are often called
differential costs. They differ among different alternatives.
Lesson 5 Present Economic Studies
Present Economic Studies are engineering economic analysis where options for accomplishing
business functions are being weighed up for application in the current business operation.
Thus, the scope is limited to one year or less and the factor of time on money can be ignored.
Present economic deliberation is applicable when the effects of time such as interest and
depreciation are irrelevant.
These are the guidelines for the logical of possible solutions. These soft rules and criteria will
be used to select the preferred alternative when defect-free output is variable or constant
among the technical solutions being considered.
Rule1: Economic Benefit Focus. Income and other economic benefits are present and largely
different from possible options. Choose an alternative that maximizes overall profitability
regardless of the number output requires.
Rule2: Cost Efficiency and effectiveness. Revenues and business gains are not present or are
fixed among solutions. Then, consider only costs and select positions that minimizes total cost
per defect-free output.
Present Economy Studies involve in the following process

A. Selection of Material
B. Selection of Process or Method
C. Selection of Design
D. Selection of Site Location
E. Benchmark of Proficiency Among Workers
F. The economy of Tool and Equipment Maintenance
G. Economy of Worker Head-Count

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A. MATERIAL OR COMPONENT SELECTION

Material is anything that forms part of the product excluding packaging. Product Material
classification usually consists of two main material types
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A. Main material or component to which is normally classified B. Secondary items are those
things added to modify the main material to be able to produce the desired results.
Normally the components are the significant cost of the product therefore substitution or
replacement for a lower or cheaper price has a great impact on the final product cost. The
following are material related factors that can be combined to reduce the expense.
- Lower price but comparable in function and quality
- Overall processing time reduction either from preparation or actual
manufacturing technique
- Durability enhancement of the final product
- Logistics is one factor that may be an irrelevant cost but may affect a normal
production run.
- Expiration and special handle may cost additional storage or handling process
should be accounted for.
The overall discussion of raw material or main component replacement should still meet
the basic quality and safety standards of which the company is operating. In this situation,
the additional benefit of the material should be focused and mainly used for decision
making.
A.1 simple drilling head problem, with two alternatives, are being presented.
Material A Material B
Output per hour 100 pieces 130 pieces
Periods for preparation 3 hours 6 hours
Part change downtime 1 hour 1 hour
Newly opened set drill P2000 P6000
The average life cycle of the drill head 20 105
The tool changer costs P100.00 per hour for just the time he is changing tools. Variable overhead
costs for the drill are P1500.00 per hour, including tool-changing time.
The cost of the operator is P50.00 per hour, including the tool-changing time during which he
is idle. Of the material presented, which one will be proved to be the cheaper one.

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A.1 Rejuvenation of Used Cooking oil
A 24 hour Fastfood fryer for chicken with a standard FDA approved filtering machine can use
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TYPE(A) Filter Set and High-grade cooking oil costing P55.50 per liter. With this filter set, the
cooking oil and the filter have to be changed after 50 hours of initial use and 1 liter have to be
mixed every 4 hours. The filter set cost P1500.
TYPE(B) cost P850 per set, are FDA approved, and have the same safety rating with TYPE(A)
with the following setup. TYPE(B) requires oil and filter should be changed every 24 hrs,
however, 1 liter of cooking oil should be mixed every 12 hours.
Both setups are affected by 2 hours of kitchen downtime for periodic cleanup.
B. SELECTION OF METHOD AND PROCESS

The main objective of process planning/process modification is to identify the most efficient
use of time to produce a component
In reality, the total labor cost related to the product is driven by the manufacturing
processes. It involves the time used for the raw material preparation and machine or actual
human intervention.
Production Efficiency can be achieved through actual method intervention or physical

change in the components of products. The decision to have a new component, the
manager should always adapt to the specific process of operations. Regular benchmark
and review should be imple mented to continually redu ce cost, this can be done
by introducing tweak s in the process.
Planning procedures are as follow:

1. Analyze the process and get an overall picture of what is required.
2. List the basic operations required to produce the result needed
4. Determine the most efficient and practical manufacturing process and tooling
required for each operation.
5 . C o m b i n e l o g i c a l o p e r a t i o n s a n d p u t t h e m i n sequence.
6. Report detection process required for the process.
SELECTION OF METHOD/PROCESS
Sahara sand contains 2.5% of precious metals. Method A costs P110 per ton of sand processed
and will recover 85% of the metal. Method B costs P80 per ton of sand processed and will

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recover 65% of the metal. The two methods require the same investment and are capable of
producing the same volume each day. If the extracted metal can be sold for P15500 per ton,
which method of extraction should be used? Assume that the supply of material is unlimited
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both can process 25 tons per hour and the plant is allowed to operate 24hrs a day. Work on this
problem based on profit per ton of precious material extracted.
C. SELECTION OF PRODUCT DESIGN

Product Design involves modification of the overall physical or functional consumer
interaction experience but would have served the same basic purpose with an offering of
further convenience to the user.
Product development is a continuous process to maintain the competitive edge in the

market it may be part of the usual upgrades or passing of new legal requirements for safety.
Normally, the result would largely influence by the current consumer socially perceived
superior product characteristics. The design may entail different sub-selection processes
such as material and processing since the result varies from minor to significant or total
overhaul of the product offering as intended.
Change in design would regularly involve in material or process change, however, there is
some design change that would only require setup change in machine settings.
Discussions about design ergonomics, safety, age user limitation, minimum law
requirements are some factors that are irrelevant to engineering economics monetary
valuation but would be influential in the overall alternative selection process.
Sample problem
Two alternative designs are under consideration for a tapered fastening pin. The fastening
pins are sold for P0.70 each. Either design will serve equally well and will involve the same
material and manufacturing cost except for the lathe and drill operations.
Design A will require 16 hours of lathe time and 4.5 hours of drill time per 1,000 units.
Design B will require 7 hours of lathe time and 12 hours of drill time per 1,000 units. The
variable operating cost of the lathe, including labor, is P18.60 per hour. The variable
operating cost of the drill, including labor, is P16.90 per hour. Finally, there is a sunk cost
of P5,000 for Design A and P9,000 for Design B due to obsolete tooling.
a. Which design should be adopted?
b. What is the annual savings over the other design if 125,000 units are sold each year?

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D. SITE SELECTION AND DESIGN

Every business location or place of operation is a key contributor to an enterprise
continuing success. The total business overhead is driven by the initial cost of
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capitalization and long term efficiency in operation. Location dictates the cost of logistics,
workforce, or tax rates these are localized driven burden which is always unique to the
specific location where the operation has been established.
Site Criteria Selection may incorporate factors such as additional improvement is

required, the possibility of shutdown due to the unstable power supply, security concern,
regularly occurring natural disasters such as floods.
Normal engineering economics problems for site location is categorized into a technical
location and financing problem.
1. Technical locations are the actual presentation of potential sites which of which
may focus on operational environmental factors such as:
a. Location Zoning
b. Infrastructure
c. Logistics
d. Manpower Availability
e. Operation Interruptions or shutdowns
2. Ownership, renting, and financing: Location ownership is a single factor that will
make or break the company since this normally involves the allocation of significant
economic resources that the company owns.
Outright ownership thru direct cash payment may provide a good price reduction but
it also involves a lot of resources being tied up to non-operational assets. By default
the cost of product or services is arbitrarily affected by the total fixed asset cost
however in an operational standpoint the current sales may not be able to carry the
overhead from non-operational assets.
Leasing or renting cost should reflect the current operational cost but one pitfall from
these types of the agreement is the cost of any building or improvement to the location
are outright owned the owner or lessor of the land or location.
Present Economics studies related to site locations cover vast transactions from actual site
selection to construction-related problems, however, since the chapter concerns with
Present Economic studies, long term financing is not included.

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Sample problem A:
Expansion for rental rooms, unit a realty development company has two possible
locations both with no foresee issue to get the necessary government licenses and other
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requirements. Both of the site is18 hectares (180, 000 sq.m.)
First Option single contiguous land has an initial pre-negotiated value of P20.00 per sq.m
raw lands and needs a road development, including access to main thorough ways, 4,000
meters long, and will cost P110 per meter. Necessary improvements would additionally
cost P60,000.00 for unit subdivision and grade into 320 lots, plus P32,000 for the perimeter
fence which is made of hollow blocks.
The second Option is a site that consists of three lots, separately owned, with a combined
total of area of 18 hectares: 7 hectares @ P25.00 per sqm, 5 hectares @ P21.00 per sqm, and
6 hectares @ P14.00 per sqm. The road total road access will cover 3,200 meters long @
P100.00 per sqm with additional culverts system to connect the two sites and would cost
an additional P25,000.00. The grading of Lot is expected to be P35,000.00; lastly, the
perimeter fence for security including the gates is P24,000.00
Site Design involves finding the most efficient in which to fit the normal operational
workflow but flexible enough to handle changes to accommodate further small
improvements. This process aims to find a selection of physical workflow setup and
maximize productions via elimination of bottleneck and reduce operational stresses by
employing minimum movement strategy. Note that location design may be part or
includes equipment change since its side-by-side influences the normal operational
procedure. There might also be a site design problem that would result only in production
efficiency or increase in production output both of which should have a monetary
conversion value.
E. PROFICIENCY OF WORKERS
Workers either as direct manipulators or machine operators, individual efficiencies greatly
affects the actual product cost, it may be contribution via more units produce or lesser units
with defects. This variation may due to the learning curve, training, overall experience, or
personal traits. In general, a worker with a high degree of efficiency is paid with higher
wages.
Engineering Economics provides specific valuation via quantitative measurement which

may relate to the number of items produce or hours spent on a given task.

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Sample:
Two workers, Employee A and Employee B, doing identical processes and works on
identical machines create 200 pcs per hour of company products, the total material cost is
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P2.50 per item. However, at quality control checks Employee B have 2 percent total rejects.
The rejected products are rerouted to a repair group with a total cost of P.60 per item.
(1.) Each worker is paid P35.00 per hour, find the total cost of 200 quality standard passed
items for each worker.
(2.) Compute how much should Employee A per hour rate is adjusted to reflect the higher
proficiency shown in the benchmark.
Sample:
Two workers, Employee A and Employee B doing identical processes and works on
identical machines. Employee A receives P25.00 per hour and A produces 100 units per
hour while Employee B produces 120 units per hour. The machine rate or operation cost is
P100.00 per hour
(2.1) Cost per unit for Worker A

(2.2) Provide the hourly wage of employee B for his cost per unit will equal to
Employee A.
F. ECONOMY OF TOOLS AND EQUIPMENT

Tools, machines, and equipment working in top grade running condition is one of business
internal goals, significant business lost might be incurred due to a faulty machine. By
default, the experience will indicate the best schedule and maintenance strategy for a
company-owned machine.
SAMPLE:
The extrusion machine used for molding plastic bottles has the following production
output per hour at with different speed, thus requiring periodic maintenance to make sure
the rejects are prevented.
SPEED Units per Hour Maintenance

A 200 Every 8 hours
B 250 Every 7 hours
C 280 Every 5 hours
A set of tools cost P1,800.00 and can be used twenty times. Each maintenance operation
costs P18.00 and the time needed to smoothen and change mold is 1 hour. The machine

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operator is paid P28.00 per hour, including the time the tool is changed. The third-party
contractor who will do all the work is paid P25.00 per cycle. The hourly rate chargeable
against the machine is P54.00 regardless of machine output speed. Which speed is the most
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economical?
G. ECONOMY OF UTILIZATION OF PERSONNEL

In the present industrialized manufacturing production assembly method of operation
requires a grouping of people works on specific tasks. It is noted that there is an efficiency
ceiling versus the number of people assigned to a specific task. Taking into effect the Law
of Diminishing returns, the present study aims to find a sufficient number of workers to
minimized idleness.
Sample:
A recurring maintenance job in a factory is being done by a three-man crew. Due to the nature
of the job and space limitation, it was observed that two of the men were idle 37% of the time;
one of them was also idle an additional 42% of the time. The three men could work together
only 21% of the time, and at any given time only one man was required.
The three men were each paid P24.00 per hour. Each time the job has performed a set of tools
and equipment with a value equivalent to P36.00 per hour was used. If the three-man crew
could complete the work in 5 hours, which crew size would be the most economical?
• Enhancement Activity.
• Generalization.
• Application.
Course Packet Discussion Forum
Post-Assessment
Post Assessment will be given in the google classroom in multiple choice.
Additional Activity
Additional activity will be presented during the discussions.
Annexes
Answer Key. This may be provided as an annex which contains answers to all the activities
and shall be written upside down.

Course
Packet
LM01-GECO
01 0313
References. This includes all third-party materials or sources in developing the material. It
shall follow the American Psychological Association (APA) Manual of Style 6th or 7th
Course Packet 01
Edition.
Feedback Form. This is an essential part of the course packet. This must be submitted to the
faculty, copy furnished the Program Head, and College Dean.
____________

Course
Packet
LM01-GECO
01 0313
Activity Sheet
Activity Sheet
There will be pre-assessment and post-assessment via google classroom in multiple choice with
10 to 20 questions to recall information and terminologies as introductory part of the course,
Engineering Economics.
Detailed instructions will be given in the google classroom.


Course
Packet
LM01-GECO
01 0313
Assessment
Assessment
Detailed instructions will be given during the class discussion.


Course
Packet
LM01-GECO
01 0313
Assignment
Assignment
Now that we are facing pandemic and we have flexible learning (online-platform: synchronous
and asynchronous learning management system), how will you handle your money?
From your two (2) options, which method is cheaper and more reasonable? How much will
you save if you will select 1 or 2?
Problem Statement for BSIE 3A:
Assuming that your father is giving you an internet allowance amounting to P1,500 monthly.
Decide whether you are going to:
1. Buy pocket wi-fi amounting to P800., a pre-paid load of P500, and why? State the
expenses and reason.
2. Have an internet connection via PLDT home digital subscriber line (DSL) Famplan
with unlimited Landline calls within the same province/city and unlimited DSL
connection up to 3 Mbps speed amounting to P1,299.
Problem Statement for BSIE 3B:
Suppose you have an allowance for food amounting to P2,000 weekly.
1. Buy foods
2. Cook foods
Answers should be submitted and up-loaded in your google classroom.



Course
Packet
LM01-GECO
01 0313
Learner’s Feedback Form

Name of Student: __________________________________________________________

Program : __________________________________________________________
Year Level : ______________ Section : __________________
Faculty : __________________________________________________________
Schedule : __________________________________________________________
Course Packet : Code : _________ Title : __________________________________
How do you feel about the topic or concept presented?

 I completely get it.  I’m struggling.
 I’ve almost got it.  I’m lost.
In what particular portion of this course packet, you feel that you are struggling or lost?
_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________
Did you raise your concern to your instructor?  Yes  No
If Yes, what did he/she do to help you?

_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________
If No, state your reason?

_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________
To further improve this course packet, what part do you think should be enhanced?
_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________
How do you want it to be enhanced?

_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________

Course
Packet
LM01-GECO
Packet
01
02 0313
Learning Module 01
Interest and the Time

Value of Money
Course Packet 02
Money-Time Relationships
and Equivalence

Learning Module Code : LM01-GECO0313
Course Packet Code : LM01-GECO0313-02

Course
Packet
LM01-GECO
02 0313
Course Packet 02
Course Packet 02
Money-Time Relationships and Equivalence
Introduction
The fundamental principle of Time Value of Money states that a peso today is worth more than
a peso tomorrow because of compounding interest effects and consideration of economic
inflation.
Learning Outcomes
problems.
problems.
problems.

Duration
The number of hours allotted for this module: (6 Hours Lecture)
• Course Packet 02: Money-Time Relationships and Equivalence = 6 hours
Lesson 3 Cash Flows
Delivery Mode
Online Learning:

Course
Packet
LM01-GECO
02 0313
Did Not Meet

Course Packet 02

Expectations
0-1 2-3 4-5
background of the
problem was
discussed.

or poorly used.

the recommendation
on the problem.
implementing the
recommendations.
Requirement with Rubrics

(Discuss the requirement along with the corresponding rubrics.)
Readings
Links for reading materials shall be shared on the first day of the class during the orientation.

1. PowerPoint presentation for the whole course packet 02 Money-Time Relationships
and Equivalence to be uploaded on the 1st day of class.
Supplemental reading for the students to enjoy watching and understanding:

Course
Packet
LM01-GECO
02 0313
2. Vidya Vikas Institute of Engineering and Technology. Module-4: Introduction to

Engineering Economy, Interest, and Time Value of Money and Comparison of
Alternatives by Dr. Vinay Kumar, BM. 2018.
Course Packet 02
3. Dario Jr, Calaque. Engineering Tutorials. Introduction to Engineering Economics. 2020.

4. Topperly. Introduction to Economics/ Engineering Economics. 2019.
5. Ameen San. Engineering Economy. 2014.
6. Nguyen, Quang. Engineering Economics Module 2-Time Value of Money (Continued).
Michigan State University. 2018.
7. Seiko Epson Corporation. Reconciliation of Liabilities arising from Financing
Activities. Annual Report 2019. Page 94. 2019.
8. Castillo, Jonathan. Epson named number one ink tank vendor in PH-IDC. 2020.
9. Fraser, Niall M., and Jewkes, Elizabeth M. Engineering Economics. Financial Decision
Making for Engineers. Fifth Edition. Pearson. 2013.
Lesson Proper
• Review.
• Activity.
• Processing of the Activity.
• Brief Lesson.
This chapter is a practical approach to the time value of money. Fully understand that today's
technology provides multiple calculators and applications to help you derive both present
value and future value of money. Do focus and take time to understand how these calculations
are derived. Critical financial decisions should be base on accurate data (because you may not
be able to recognize whether the answers are correct or incorrect). There are five (5) variables
that you need to know:
1. Present value (PV) - This is your current starting amount. It is the money you have in
your hand at present, your initial investment for your future.
2. Future value (FV) - This is your ending amount at a point in time in the future. It should
be worth more than the present value, provided it is earning interest and growing over
time.
3. The number of periods (N) - This is the timeline for your investment (or debts). It is
usually measured in years, but it could be any scale of time such as quarterly, monthly,
or even daily.
4. Interest rate (I) - This is the growth rate of your money over the lifetime of the
investment. It is stated in a percentage value, such as 8% or .08.

Course
Packet
LM01-GECO
02 0313
5. Payment amount (PMT) - These are a series of equal, evenly-spaced cash flows.
Course Packet 02
Chapter 1. Interest rates - types and terminology

Simple interest
Simple interest is computed on the original amount as the return on that principal for one time
period. Example: P1,000 invested for ten (10) years at 5% simple interest will yield P1,500 by
the end of ten years. 1000 + (1,000 x 0.05 x10) = P1,500
Compound interest
Compound interest is computed on the original amount as the return on that principal plus all
unpaid interest accumulated to date. Compound interest is always assumed in TVM problems.
Example: P1,000 invested for ten (10) years at 5% interest compounded quarterly (4 times a
year) will yield P1,643.62 by the end of ten years. 1000 + ((1,000 x(1.0125)40) = P1,643.62 This is
much larger than the P1,500 obtained through the simple interest calculation. This is a powerful
concept that means money can grow at an exponential rate depending on how often interest is
credited to the account. Once interest is credited, it becomes in effect principal. Hence, you
must understand the compounding frequency of your investment before committing your
money to it.
Fixed interest rate

A fixed interest rate is a straight forward rate that remains constant during the life of the loan
or investment.

Course
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Variable interest rate

Variable interest rate changes during the life of the loan and is usually tied to the prime rate,
the actual points will sway depending on the BSP regulation.
Course Packet 02
Mixed interest rate changes from fixed to a variable or from variable to fixed. It has some merits
depending on your situation, but it is not a rate you would want to choose for a long-term
investment or debt.
Annual Percentage Rate.
APR is a broader measure of the cost to you of borrowing money. It is tied to the Prime Rate
and includes fees and other charges. In the case of getting a mortgage, a loan, or a credit card,
the APR reflects many aspects: the interest rate, the mortgage broker fees, taxes, insurance, and
other charges that you have to pay to get the loan are some of the facets that the APR reflects.
For that reason, APR is usually higher than your interest rate. APR is also known as the
published or listed rate for loans. It is the percentage of interest a bank or other loan provider
charges each year when you borrow any amount of money. This percentage can help you
accurately gauge how much you will pay throughout the lifetime of a loan. By law, all financial
institutions are required to show you a loan's APR. As such, you must compare APR's of
various loans before you make financial borrowing decisions.
An amortized loan is a loan with scheduled, periodic payments that consist of both principal
and interest. An amortized loan payment pays the relevant interest expense for the period
before any principal is paid and reduced.
How to
To amortize a loan, it usually means establishing a series of equal monthly payments that will
provide the lender with:
1. Interest-based on each month's unpaid principal balance
2. Principal repayment that will cause the unpaid principal balance to zero at the end of
the loan

Course
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While the amount of each monthly payment is identical, the interest component of each
payment will be decreasing and the principal component of each payment will be increasing
during the life of the loan.
Course Packet 02
In other words, amortization is a mathematical calculation or a method for repaying a loan in

equal installments. Part of each payment goes toward interest and any remainder is used to
reduce the principal. As the balance of the loan is gradually reduced, a progressively larger
portion of each payment goes toward reducing the principal.
For example, if you mortgage a loan to buy a house for P300,000 for 30 years at an interest rate
of 5.25%, your equally divided monthly payment will be P1,657 of combined principal and
interest. In the first year, your payments will be applied as P15,649 to interest and P4,230 to
the principal. But as time goes by, your payments for the last year of your mortgage will be
applied as P554 to interest and P19,325 to the principal to bring the entire loan to a zero balance.
The simple fact that you understand how amortization schedules work will help you make
decisions to speed the pay at the beginning of the life of the mortgage and thus gaining
momentum so you can reduce the overall cost of interest over the life of the loan. The next time
you borrow a loan to buy a car or a house, take the time to understand your amortization
schedule in addition to making sure your loan does not have an early repayment penalty that
prevents you from saving on the total cost of your loan borrowing.

Course
Packet
LM01-GECO
02 0313
Chapter 4. TVM impact on debts

On multiple occasions, you have to make financial decisions that prevent you from investing
and taking advantage of the time value of money concept. This is also known as the
Course Packet 02
opportunity cost of choosing a certain decision over another possible choice. Understanding
the impact of the time value of money on debts would help your decisions.
Chapter 5. TVM impact on investments

The time value of money concept is used to compare investment alternatives and to solve
problems involving loans, mortgages, leases, savings, and annuities.
You already know from the previous chapters that TVM is based on the concept that a dollar
that you have today is worth more than the promise or expectation that you will receive a dollar
in the future (because you can invest your dollar today and earn compounded interest). Your
money grows with time. For example: if you invest one dollar at 6% annual interest, you are
sure to collect a future value of $1.06 by the end of your investment. Consequently, it is safe to
say that to receive $1.06 in the future, you need to invest $1.00 as a present value.
The correlation between the present and future value can be calculated to determine the value
of a single sum of money or a series of equal, evenly-spaced payments promised in the future.
It can be converted to an equivalent value today (present value) and a single sum or a series of
payments will grow to at a future date (future value). This chapter is not intended to teach you
the formulas you need to do the calculations. Today's technology provides an ample number
of applications to help with such mathematical equations. Our intention here is to help you
reason logically so you can recognize a correct answer from an incorrect one, or, as accurately
as possible, estimate a present or a future value.
In any investment scenario, you can calculate an unknown value if you have any four of the
following:
1. Interest rate (simple or compounded)
2. Number of periods (years, months, and/or days)
3. Payment amount (inflow or outflow)
4. Present value (single amount or annuity)
5. Future value (single amount or annuity)
6.
Planning for retirement is an example that is normally used to calculate various scenarios, such
as the following examples:
1. How much money should I invest now to reach a certain annuity in the future?
2. How much money should I expect to receive if I invest a predetermined amount now?

Course
Packet
LM01-GECO
02 0313
Another scenario could be to find out the interest rate that is needed to reach a certain amount
when investing now for a future payment. If you wish to go back to basics, you could always
draw a cash flow diagram to help you visualize a problem with inflow and outflow of funds to
Course Packet 02
determine if it can be solved using TVM formulas. Regardless of what you are trying to find
out, understanding the time value of money can seriously positively impact the way you make
financial decisions.

To compare alternatives that provide the same service over extended periods of time when
interest is involved, we must reduce them to an equivalent basis that is dependent on: — If two
alternatives are economically equivalent, then they are equally desirable.
Equivalence factors are needed in engineering economy to make cash flows (CF) at different
points in time comparable. For example, a cash payment that has to be made today cannot be
compared directly to a cash flow that must be made in 5 years.
Since the time value of money changes according to:

1. The interest rate,
2. The amount of money involved,
3. The timing of receipt or payment,
4. The manner in which interest is compounded,
We need a way to reduce CF's at different times to an equivalent basis. Equivalence factors
allow us to do so.
Principles of Equivalence
Equivalent cash flows have the same economic value at the same point in time.
Cash flows that are equivalent at one point in time are equivalent at any point in time.
Conversion of a cash flow to its equivalent, at another point in time must reflect the interest
rate(s) in effect for each
period between the equivalent cash flows.
Equivalence between receipts and disbursements: the interest rate that sets the receipts
equivalent to the disbursements is
the actual interest rate (IRR).
Economic equivalence is established, in general, when we are indifferent between a future
payment, or series of payments, and a present sum of money.
Notation and Cash Flow Diagrams (CFDs)

Course
Packet
LM01-GECO
02 0313
The following notation is utilized in formulas for compound interest calculations:
I = effective interest rate per interest period

Course Packet 02
N = number of compounding periods
P = present sum of money; the equivalent value of one or more cash flows at a reference point
in time called present
F = future sum of money; the equivalent value of one or more cash flows at a reference point
in time called future.
A = end-of-period cash flows (or equivalent end-of-period values) in a uniform series

continuing for a specified number of periods, starting at the end of the first period and
continuing through the last period
1. The Horizontal line is a time scale, with progression of time moving from left to right. The
period (e.g., year, quarter, month) labels can be applied to intervals of time rather than to points
on the time scale.
2. The arrows signify cash flows and are placed at the end of the period. If a distinction needs
to be made, downward arrows represent expenses (negative cash flows or cash outflows) and
upward arrows represent receipts (positive cash flows or cash inflows).
3. The cash flow diagram is dependent on the point of view. The situations shown in the figure
were based on the cash flows as seen by the lender. If the directions of all arrows had been
reversed, the problem will have to be diagrammed from borrower's viewpoint (Wikidot.com
2008).
Lesson 3. Cash Flows

As defined by The Economic Times 2020, cash flow is the amount of cash or cash-equivalent
which the company receives or gives out by the way of payment(s) to creditors. Cash flow
analysis is often used to analyse the liquidity position of the company. It gives a snapshot of
the amount of cash coming into the business, from where, and amount flowing out.
Thus, cash flow should be part of regular reporting and strategies should be implemented to
be prepared in the future and avoid cash flow issues. Strategies such as:
1. Be honest about your current situation
2. Decrease your spending

Course
Packet
LM01-GECO
02 0313
3. Anticipate upcoming costs

4. Evaluate your credit options
5. Follow-up on receivables
Course Packet 02
6. Ask expert or accountant to solve cash flow issues for tight situations

Course
Packet
LM01-GECO
02 0313
Activity Sheet
Activity Sheet


Course
Packet
LM01-GECO
02 0313
Assessment
Assessment

Course
Packet
LM01-GECO
02 0313
Assignment
Assignment
Quiz 02: Multiple Choice, True or False


Course
Packet
LM01-GECO
02 0313

Name of Student: __________________________________________________________
Program : __________________________________________________________
Faculty : __________________________________________________________
Schedule : __________________________________________________________
Course Packet : Code : _________ Title : __________________________________
How do you feel about the topic or concept presented?

 I completely get it.  I’m struggling.
 I’ve almost got it.  I’m lost.
In what particular portion of this course packet, you feel that you are struggling or lost?
_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________
Did you raise your concern to your instructor?  Yes  No
If Yes, what did he/she do to help you?

_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________
If No, state your reason?

_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________
To further improve this course packet, what part do you think should be enhanced?
_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________
How do you want it to be enhanced?

_____________________________________________________________________________
_____________________________________________________________________________
__________________________________________________________________________

Course
Packet
LM01-GECO
03 0313
Learner’s Performance Report

Learner’s Performance Report
Name of Student: __________________________________________________________

Program : __________________________________________________________
Faculty : ___________________________________________________________
Schedule : ____________
_______________________________________________
Learning Module Code Learning Module Title Rating
Course Packet Code Course Packet Title Rating
Course Code: ____________ Title: _________________________________________________

BPSU-Module-01 GECO0313 EEcon - Alboro 2021

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Published by the Bataan Peninsula State University

Course Module Development Team

Evaluator 01 Dr. John Ryan C. Dizon, PIE, Program Head

Quality Management Team:

Jesselyn C. Mortejo, EdD

Emmanuel C. Macaraeg, PhD, CESE

Course Module: Engineering Economics ii

Course Module: Engineering Economics iii

Message Board Netiquette and Guidelines

Course Module: Engineering Economics iv

Good day class!

Let us enjoy our lessons and learn from them.

Course Module: Engineering Economics v

LEARNING MODULE 01: INTEREST AND THE TIME VALUE OF MONEY 6

Course Packet 1 Introduction 8

Lesson 2. Principles of Engineering Economics 15

Lesson 3. Engineering Economics and the Design Process 17

Lesson 4. Cost Concepts for Decision Making 20

Lesson 5. Present Economic Studies 25

Course Packet 2 Money-Time Relationships and Equivalence 38

Lesson 1 Interest and the Time Value of Money 41

Lesson 2 The Concept of Equivalence 46

Lesson 3. Cash Flows 47

LEARNING MODULE 02: ENGINEERING ECONOMIC PRINCIPLES AND METHODS

Course Packet 3 Economic Study Methods

Lesson 1 The Minimum Attractive Rate of Return

Lesson 2. Basic Economic Study Methods: Present Worth, Future

Worth, Annual Worth, Internal Rate of Return,

External Rate of Return

Lesson 3. Other Methods: Discounted Payback Period, Benefit/

Course Module: Engineering Economics vi

LEARNING MODULE 03: THE BASIC ECONOMIC DECISION-MAKING CONCEPTS

Course Packet 4: Decisions Under Certainty

Lesson 1. Evaluation of Mutually Exclusive Alternatives

Lesson 2. Evaluation of Independent Projects

Lesson 3. Effects of Inflation

Lesson 4 Depreciation and After-Tax Economic Analysis

Lesson 5 Replacement Studies

Course Packet 5: Decisions Recognizing Risk

Lesson 1 Expected Monetary Value of Alternatives

Lesson 2 Discounted Decision Tree Analysis

Course Packet 6: Decisions Admitting Uncertainty

Lesson 1 Sensitivity Analysis

Lesson 2 Decision Analysis Models

Course Module: Engineering Economics vii

This course will cover the following set of knowledge sets:

• Module 01: INTEREST AND THE TIME VALUE OF MONEY

Key Learning Competencies

Course Module: Engineering Economics 1

• No. of Units: 3 Units Lecture and 3 Hours Lecture per Week

Learning Management System

Assessment with Rubrics

Did Not Meet

Course Module: Engineering Economics 2

methodology. Errors methodology. Use of correct methodology.

Conclusions/ Recommendations Provided feasible Provided feasible

Final Requirement with Rubrics

Class Standing Percentage

Class Participation 30%

Major Course Outcome (Application) 60%

Class Standing - 70% Class Standing - 70%