Module 1

Introduction to Engineering Economy

Principle of Engineering Economy

1. Principles of Engineering Economy (Not a video, a power point presentation in the course website)

Module 2

Cost Concepts and Design Economics

Price, Demands, Revenue, Cost, Breakeven Point, & Profit, 

1. Cost Terminology (Not a video, a power point presentation in the course website)

2. Price and Demand Relationship

3. Total Revenue Function & Maximum Revenue

4. Total Revenue, Total Cost and Profit

5. Cost, Volume, and Breakeven Point Relationships

6. Demand, Cost, Revenue, Breakeven Points, Profit Graphs Using MS Excel

7. Demand for Maximum Revenue and Profit and Breakeven Points Example Calculations

8. Price Demand Expense Revenue Profit Calculations Applying Calculus

Module 3

Cost-Estimation Techniques

Cost Price Index, Parametric Cost Estimating, Learning Curve, Regression

1. Cost Index and Price Index Explained with Examples Using MS Excel

2. Power Sizing Exponential Cost Estimating Technique/Method/Model Example Problem Explained

3. Learning Curve Explained with Example Calculations Using MS Excel

4. Cost Estimation by Regression Method Example Explained using MS Excel

5. How to Perform Simple Linear Regression Analysis Using MS Excel and Minitab Explained with Examples

6. How to Explain and Interpret the Results from a Simple Linear Regression Analysis Real Life Example 1  

7. How to Explain and Interpret the Results from Simple Linear Regression Analysis Real Life Example 2

Module 4

Time Value of Money

Simple Interest, compound Interest, Cash-Flow Diagrams and Tables, Calculation of Present/Future/Annuity/Interest Rate/Number of Period, Deferred Annuity, Uniform & Geometric Series, Nominal and Effective Interest Rates, 

1. Simple and Compound Interest Time Value of Money Explained

2. Cash Flow Diagram Cash Flow Table Time Value of Money Explained

3. Present & Future Value/Worth, Payment, Rate, Number of Period, Calculations Using MS Excel

4. Monthly Payment, Present and Future Value, Interest Rate, Inflation, Retirement Investment Example

5. Nominal and Effective Rate

6. The Most Useful and Practical Technique for Solving Engineering Economy Problems

7. Uniform Arithmetic Gradient Series Cash Flow

8. Geometric Sequences of Cash Flow using MS Excel

9. Loan Amortization Schedule Calculation Using MS Excel and Answer Many Relevant Questions

10. Annual Percentage Rate or APR Explained with Example

Module 5

Evaluating a Single Project

Minimum Attractive Rate of Return (MARR), Present Worth, Future Worth, Annual Worth, Internal Rate of Return (IRR), External Rate of Return (ERR), & Payback (Payout) Period

1. Basics

   1. Hurdle Rate or Minimum Attractive Rate of Return (MARR)

   2. Present Worth/Value

   3. Future Worth/Value

   4. Annual Worth/Value | Capital Recovery

   5. Internal Rate of Return (IRR)

   6. Simple Payback Period

   7. Discounted Payback Period

   8. Simple vs. Discounted Payback Period

2. Practical Real World Examples

1. Bond Value/Yield/Investment Calculations

2. Bond Value/Yield/Investment Calculations 2nd Example

3. Infinite Analysis Period

   1. Capitalized Cost

   2. Capital Recovery

4. Investment Analysis

5. Double the Investment

6. Investing in Solar Panel

7. Retail Store Investment Analysis

Module 6

Comparison and Selection among Projects

Applying Present/Future/Annual Worth/Value, IRR, and Payback Period Analysis Using both Formulas and Cashflow Diagram/Table in MS Excel 

1. Equal Useful Lives

   1. Directly Using the MS Excel Formulas - Quick and Shortcut, But Involves More Thinking

   2. Using Cashflow Diagram/Table in MS Excel - Easy to Think and Understand

   3. Internal Rate of Return IRR Analysis Calculation Applying Cashflow Diagram Table MS Excel Function

   4. Payback Period Analysis | Simple and Discounted | Compare Multiple Projects | MS Excel

2. Unequal Useful Lives

   1. Repeatability Assumption

   2. Co-termination Assumption

3. Practical Real World Examples

   1. Auto Financing

   2. Home Financing

   3. Home Refinancing

Module 7

Depreciation and Income Taxes

1. Basics/Classical/Historical Depreciation Methods

   1. Straight-Line (SL) Method

   2. Declining-Balance (DB) Switches Over to Straight-Line (SL) Method

2. Modified Accelerated Cost Recovery System (MACRS) Step by Step Guideline

   1. MACRS Introduction Step 1 & 2  

   2. MACRS Calculation Step #3

   3. MACRS Calculation Step #4

   4. MACRS Calculation Step #5

3. Modified Accelerated Cost Recovery System (MACRS)Examples

   1. MACRS GDS & ADS Example

4. After-Tax Cashflow ATCF Analysis

   1. Single Project

   2. Multiple Projects

5. IRS Documents/Tables (IRS Updated Year 2021)

   1. https://www.irs.gov/publications/p946 

   2. https://www.irs.gov/pub/irs-pdf/p946.pdf  

(Must use the latest IRS publications for any depreciation/tax calculation)   

Reference

1. General

   1. Sullivan, W. G., Wicks, E. M., & Koelling, C. P. Engineering Economy.

   2. Newnan, D. G., Eschenbach, T. G., Lavelle, J. P., & Lewis, N. A. Engineering economic analysis.

2. Module 7: Depreciation and Income Taxes

   1. https://www.irs.gov/publications/p946

   2. https://www.irs.gov/pub/irs-pdf/p946.pdf