Objective:
To expose students to the concepts of engineering economics and make them able to apply these concepts to make decisions in choosing the best alternative from the available ones.
Only tangible parameters would be covered at length, exposure to non-tangible parameters can be given through expert lectures.
Course Contents:
1.
Introduction:
Basic
principles of economic choice management’s responsibility for investment
decisions.
Engineer’s
responsibility for investment decisions.
Conceptual
framework of engineering economy.
Equivalence:
Interest
& Interest rates, Plans for repayment of borrowed money. Characteristics of
repayment plans, compound interest. Equivalence and its significance in economy
studies. Present worth, equivalence and interest rates.
Financial mathematics:
Symbols,
The –end-of – period conventions. Formulas for single payments. Formulas for
uniform series of end – of –period payments.
Interest tables:
Relationship
between interest factors and their utilization relative to time. Conversion of
single payments at one date to equivalent single payments at another date.
Finding
unknown interest rates.
Conversation
to and from uniform series of payments.
Geometric
gradient series.
Uses
of gradient factors.
Nominal
& effective interest rates.
Deferred
annuities.
Continuous
compounding of interests.
Problems
in personal finance.
Judging the attractiveness of proposed investments:
Equivalent
uniform annual cash flow method. Present with method.
Internal
Rate of Return method. Benefit-cost ratio method & Cost-
effectiveness.
Relationship
between accounting and engineering economy.
Income
tax consequences of certain decisions, Increment
Costs,
economic sizing and interdependent decisions.
Techniques for evaluating alternatives
:
Economy
studies for retirement and replacement. Financing effects on economy studies.
Capital budgeting & the choice of a maximum attractive rate of return.
Prospective inflation and sensibility analysis. Use of mathematics of
probability in economy studies.
Reference Books:
1. Principle of Engineering Economy- By Grant Eugene L and others.
Evaluation:
Internal 60 %
(Class
assignments/tutorials, Class attendance, Tests, Class interactions, and any
laboratory work if required
etc.)
Final 40 %
(Exam, Jury, Term Paper etc.)
