Lecture No. 1
Foundations of Engineering Economy
1. Why Economics Is Important to Engineers
A. Definition
Definition: Engineering Economy involves:
Formulating
Estimating
Evaluating
The economic outcomes when alternatives are available.
An alternative
Lecture No. 3 Combining Factors 1. Shifted Uniform Series
A shifted series begins at a time other than the end of period 1.
F=? P 0 1 2 3 4 5 6 7 8 9
0
1
2
3
4
n
A = given, $50
To find P: Use P/F to find P of each disbursement at year 0 and then add them
Lecture No. 6 Annual Worth Analysis 1. Advantages and Uses of AW Analysis
Annual worth, AW, dollars per year is perhaps easiest to understand is perhaps best to use, i.e. preferable to PW, FW and rate of return. AW is equivalent to the PW and FW values a
Lecture No. 10
Making Choices: The Method, MARR and Multiple
Attributes
1. Comparing Mutually Exclusive Alternatives
Any method PW, AW, FW, ROR or B/C can be used to select one alternative
from two or more and obtain the same correct answer. Only ONE meth
Lecture No. 9 Benefit/Cost Analysis and Public Sector Economics 1. Public Sector Projects
Public sector projects are owned, used and financed by the citizenry of any government level. Public sector projects have a primary purpose to provide services for
Lecture No. 4 Nominal and Effective Interest Rates 1. General
The difference between nominal and effective interest rates is that nominal means once per year and effective means compounding more than once per year.
a. Nominal Interest Rate
Nominal interes
Lecture No. 7 Rate of Return Analysis: Single Alternative 1. Interpretation of a Rate of Return, ROR, Value
ROR is the rate paid on the unpaid balance of borrowed money, or the rate earned on the unrecovered balance of an investment so that the final pay
Lecture No. 5 Present Worth Analysis 1.Present Worth Analysis
The PW is always less than the actual cash flow for any interest rate greater than zero because all P/F factors have a value <1, therefore, present worth values are often referred to as discou
Lecture No. 2 Factors: How Time and Interest Affect Money 1. Single Payment Factors
A. F/P, P/F
The fundamental factor in engineering economy is the one that determines the amount of money F accumulated after n periods from a single present worth, P, with