ENGINEERING

ECONOMIC
ANALYSIS

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Topics to Be Covered in Today’s Lecture

 General Intro About the course

 Chapter 1 Foundation of
engineering economics

 Chapter 2 Time value of money &

Economic Equivalence

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 About the course:

 This course deals with the application of

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

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 Text and Reference Books
1. Contemporary Engineering Economics 2. Engineering Economy by William G.
by Chan S. Park Sullivan, Elin M. Wicks, C. Patrick
Koelling

3. Engineering Economic Analysis by 4. Engineering Economy By Leland

Donald G Newman,Ted G. Eschenbach Blank & Anthony Tarquin, 7th Ed
& Jerome P. Lavelle

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 Course Objectives

To provide engineering student with

the knowledge of basic concepts of
engineering economics as a decision
making tool to select the suitable
alternatives for engineering projects.

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

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 Tentative Course Schedule
Topics
Week
Engineering Economic Analysis – CEM 518
1 Introduction
1 Foundation of Engineering Economics
1 Time value of money and Economic Equivalence
2 Development of interest formulas
Development of interest formulas, Nominal and
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effective interest rate
4 Payback period, Present Worth Analysis
5 Future Worth Analysis, Rate of Return Analysis
6 Economics analysis of public sector project
7 Replacement / Retention Analysis
8 Depreciation
9 Inflation in engineering economics
10 Decision under risk and uncertainty
11 Tutorials
12 Revisions

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Other important comments:
1. Student’s efforts: Besides class hours, every student
should devote few hours a week to grasp the content
of the book and the class notes, to work out the
examples, and to do homework exercises.
2. Assignments: The homework assignments will be
announced in class and completed homeworks need
to be submitted. Electronic versions will not be
accepted. It is your responsibility to obtain the
assignments if you miss class.
3. Regular attendance is essential. Students who miss
a class are responsible of all the work, notes,
handouts, and assignments they miss.
4. In order not to disturb the lecture, the students should
always arrive on time and avoid leaving the class early.
Furthermore, everybody is asked to keep cell phones
off during class sessions and abstain from
unnecessary and unauthorized conversation.