Chapter 1 FAKK 2010

Chapter 1 FAKK 2010 - CGN 4101 & CGN 4905 Civil Engineering...

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CGN 4101 & CGN 4905 Civil Engineering Cost Analysis FALL 2010 DR. GLAGOLA LECTURE CHAPTER 1
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Instructor Background Syllabus Books Chapters
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ENGINEERING ECONOMY General Uses 1. Selecting among alternatives Payment Options - Rent, Lease, Buy, Lump Sum, Finance Retirement Plans - Investment Opportunities Selecting Equipment Options - Equipment Type Payment Options 2. Determine how to invest limited resources Resources - Time, Money, Equipment Most important to businesses Financially beneficial allocation of assets
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ENGINEERING ECONOMY General Uses (cont.) 3. Uses a common Denominator ($) to make decisions Turn everything into money Often hard to do 4. Objectively Quantify Alternatives Looking at $ of different alternatives Low cost + High return = GOOD Not all options / alternatives can be quantified 5. Value Engineering, Cost/Benefit Analysis, Bidding Strategy VE Building or Components
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ENGINEERING ECONOMY Interest Rates Determined by: 1. Risk 2. Supply and Demand 3. Job Overhead 4. Government Regulations “Prime Rate” Credit Cards - “Prime” + “X%” People Spending $, Government increases rates - makes it harder to buy People hoarding $, Government decreases rates - makes it
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CONCEPTS FOR THIS LECTURE ENGINEERING ECONOMY INTEREST TYPES OF INTEREST MINIMUM ATTRACTIVE RATE OF RETURN (MARR) SYMBOLS USED CASH FLOW DIAGRAMS FUNCTIONAL NOTATION
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INTEREST WHAT IS INTEREST? INTEREST is the ”RENT” paid for the use of money
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TYPES OF INTEREST RATES Simple Interest Interest paid out as soon as it is earned Interest is calculated based off of the original principal No interest accrues Compound Interest
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This note was uploaded on 02/07/2011 for the course CGN 4101 taught by Professor Wise during the Spring '08 term at University of Florida.

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Chapter 1 FAKK 2010 - CGN 4101 & CGN 4905 Civil Engineering...

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