ENGR 345: Engineering Economy

Summer 2007: Daily, 8:00- 9:15, FLAC 404
Instructor: Dr. L. K. Gaafar, Ext. 5355
www.aucegypt.edu/gaafar

The General Teaching Policies document is an integral part of this syllabus

Catalog description: Economics and cost concepts. The time value of money. Worth of investments and economic evaluation of alternative choices. depreciation methods and tax incentives. Analysis of public sector projects. Risk and uncertainty in economic evaluation.

Textbook:     White, J., Case, K., Pratt, D., Agee, M. “Principles of Engineering Economic Analysis”, 4^th edition, John Wiley, 1998.

Grading:

Computer Usage:     Students will be introduced to Microsoft Excel and will utilize it in assignments.

Course Outcomes: The student who successfully completes this course will be able to:

1. Apply the basic concepts of engineering economy as part of a decision making process.

2. Derive and use the different engineering economy factors.

3. Evaluate investment opportunities and compare between alternatives using single and combined engineering economy factors.

4. Perform a replacement study considering inflation and indirect cost allocation.

5. Use depreciation and depletion models.

6. Perform breakeven analysis and sensitivity analysis under uncertainty conditions.

7. Utilize spreadsheet functions to perform economic calculations.

Examination: The midterm exams will be administered at the dates shown below the course outline. All examinations will be closed book. All exams are comprehensive. Exams are given at the time of the class and are timed.

Course Outline:

·          Role of engineering economy in the decision making process                            

·          Derivation of engineering economy factors and their use                                         

·          Nominal and effective interest rates and continuous compounding                          

·          Use of multiple factors                                                                                             

·          Present worth and capitalized cost evaluation                                                          

·          Equivalent uniform annual worth evaluation                                                            

·          Rate of return computation                                                                                       

·          Benefit/Cost ratio evaluation                                                                                    

·          Replacement analysis                                                                                                

·          Inflation, cost estimation and indirect cost allocation                                               

·          Depreciation and depletion models                                                                           

·          Break-even analysis and payback period                                                                  

·          Minimum attractive rate of return                                                                            

·          Sensitivity analysis and expected value decisions                                                    

Exam I: Monday, 25 June
Exam II: Monday, 9 July