END 312E - Engineering Economics

Course Objectives

I. To enable an engineer to apply economic analyses in their specialized field of engineering, II. To teach the adequacy and limitations of cash flow analyses in evaluating investments, III. To develop the ability to formulate cash flow models in practical applications and ensure an understanding of the assumptions behind these models, IV. To develop the skill to present the results of the modeling process to individuals who are not closely involved with management and engineering analyses.

Course Description

Cost and accounting concepts. Terminology and cash flow diagrams. Interest factors and their applications. Nominal and effective interest rates and continuous discounting. Present value and capitalized cost analysis. Annual cash flow analysis. Rate of return (increment) analysis. Profit/Cost ratio analysis. Payback period analysis. Replacement analyses. Inflation-interest relationships. Depreciation. Depletion. Post-tax economic analysis. Break-even analysis. Capital budgeting under budget constraints. Sensitivity analysis and decision trees. Investment analyses under risk.