Lecture Plan of Engineering Economics
Week
Topics
Evaluation
Instruments
used
Introduction
st
1
I.
II.
III.
IV.
V.
Basic Concepts and principles of Economics.
Micro-economics theory & the problems of scarcity.
Basic concept of Engineering Economics.
Engineering economics decisions.
Role of an engineer in a business decision.
Economic Environment
2nd
I.
II.
III.
Demand and supply concepts.
Equilibrium analysis.
Elasticity of demand and supply.
Assignment # 1
Elementary Financial Analysis
I.
II.
3rd & 4th
Basic accounting equation.
Development and interpretation of financial statements :
i.
Income Statement.
ii.
Balance Sheet.
iii.
Cash flow.
iv.
Working capital management.
Quiz # 1
Break Even Analysis
5th & 6th
I.
II.
III.
IV.
V.
VI.
Revenue/cost terminologies.
Cost Behaviors.
Determination of Costs/Revenues.
Numerical and graphical presentations.
Practical applications.
BEA as a management tool for achieving financial/operational
efficiency.
7th & 8th
Time Value Money
I.
Simple interest rate.
Assignment # 2
II.
III.
IV.
V.
VI.
VII.
VIII.
Compound rate of interest.
Nominal, Real and Effective Interest Rates
Future value (FV) and Present value (PV) of a single sum of money.
An ordinary annuity.
An annuity due.
A perpetuity (PV only).
A series of unequal cash flows.
Mid Term
Long Live Assets
I.
II.
9th & 10th
III.
IV.
Cost of long lived asset.
The different depreciation methods for property, plant, and
equipment, the effect of the choice of depreciation method on the
financial statements, and the effects of assumptions concerning useful
life and residual value on depreciation expense.
Calculate depreciation expense.
Calculate amortization expense
Quiz # 2
Capital Budgeting
I.
11th & 12th
II.
III.
The capital budgeting process, including the typical steps of the process
and distinguish among the various categories of capital projects.
The basic principles of capital budgeting, including cash flow Assignment # 3
estimation
The evaluation and selection of capital projects is affected by mutually
exclusive projects, project sequencing and capital rationing.
Source Of Capital
Quiz # 3
13th
I.
II.
III.
Short term sources of finance.
Long term finance.
Role of financial intermediaries.
Selections Between Alternatives
14th & 15th
I.
II.
III.
Cost-benefit analysis.
Selection amongst materials, techniques, designs etc.
Investment philosophy, Investment alternatives having identical lives,
Alternatives having different lives, Make of buy decisions and
replacement decisions.
Assignment # 4
IV.
V.
Calculate and interpret the results using each of the following
methods to evaluate a single capital project: net present value
(NPV), internal rate of return (IRR), payback period, discounted
payback period, and profitability index (PI).
Compare the NPV and IRR methods when evaluating independent and
mutually exclusive projects and describe the problems associated with
each of the evaluation methods.
Cost Of Capital
16ht
I.
II.
III.
IV.
Cost of Equity.
Cost of Debt.
Cost of Retained Earnings.
Weighted average cost of capital.
Final Exam
Sir Syed University Of Engineering & Technology
Department Of Computer Engineering
Class:
BS(CE)
Semester :
Course code :
HS301
Course name:
Lecture name :
Muhammad Asim Rafique
Contact email:
asim_r83@hotmail.com
6th
Engineering Economics
Tutorial/consultation time :
Course website:
9 Cr.hrs
financeasim.wordpress.com
Purpose of Course:
Most of the engineering projects that you will undertake during your career will have to meet three major
tests in order to be built. (1)- The project must be technically sound and workable. Most of the classes
that you will take as part of your degree are intended to ensure that you have the knowledge and
background to design technically sound and workable projects. (2)- In a free market economy the project
must make an economically attractive investment. If your technically sound engineering design cannot
make money, no one will build it. This is where this class comes in. As an engineer it is not part of your
B.S. degree program to make you an expert in business and finance, but it is necessary that you know how
to assess whether the earnings from a project will satisfy investors sufficiently to obtain the capital to
build the project. This is the class where you will learn how to assess whether the earnings potential of a
project will make it the type of project in which people will invest. (3)- The project must be legal to
complete (a big part of this has to do with environmental soundness). Your individual degree program
may or may not provide training for you in this last area. In addition to teaching you how to assess the
economic viability of your engineering projects this class also has the added goal of showing you how
investment decision techniques that work in engineering can also be used to help you increase your
personal wealth and avoid financial mistakes in order to interpret the result thereof that is useful in their
profession.
Recommended Books
I.
II.
III.
Engineering Economics 4/E McGraw-Hill series in industrial engineering and management
science. Author, Riggs. Publisher, McGraw-Hill Education.
Engineering Economic Analysis Eighth Edition Donald G. Newnan Jerome P. Lavelle Ted G.
Eschenbach.
Engineering Economics. NEW DELHI-110001. 2012. R. Panneerselvam. Professor. School of
Management. Pondicherry University.
Marks Distribution Scheme:
Mid-term
30 Marks
Test/Quiz/Assignments
20 Marks
Sessional
50 Marks
Semester Examination
50 Marks
Total
100 Marks