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 ou
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 f
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 rat
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
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 p
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
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 unr
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, therefor
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 accumulat