Catalog Description

EN450: Engineering Economic Analysis (3-0-3).

This course provides the basic methods and reasons for conducting an engineering economic study are presented. Economic criteria are developed. Procedures for making a selection from a set of technically feasible alternatives are studied. Assumptions and implications associated with these decision-making procedures are discussed. [fall, spring]

Textbook

Chan S. Park , Contemporary Engineering Economics, 3rd Edition, by Prentice Hall, 2002.

References

Economics class notes, special topic handouts, Internet materials

Course Coordinator

CDR A. Schedel, Assoc. Professor D. Fredriksson

Goals

1. Understand the use of the time-value-of-money concept as it applies to financial decisions.
2. Compare potential investments using net present worth, annual equivalent worth, rate of return or benefit/cost analyses.
3. Evaluate the effects of inflation, depreciation and taxes on financial investments.
4. Apply formulas in a spreadsheet program to facilitate financial computations and presentations.
5. Formulate a budget and long-range financial plan in a project group.

Prerequisites

1/C Engineering major or approval of NAOE Department Chairman

Class Topics

1. Introduction & Engineering Economic Decisions
2. Costs and Decision Making
3. Interest Rates and Formulas
4. Present Worth Analysis,
5. Annual Equivalent Worth Analysis
6. Rate of Return Analysis
7. Depreciation and Taxes
8. Inflation
9. Replacement Decisions
10. Benefit-Cost Analysis

Computer Usage

Basic computer usage, such as use of word-processing and spreadsheet software, is expected for completion of various homework assignments and laboratory write-ups.

All students learn how to build loan amortization tables on a spreadsheet. Spreadsheets are used throughout the course to illustrate "what-if" and breakeven analysis.