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KING SAUD UNIVERSITY, College of Engineering

GE 401: Engineering Economy

(ٍSecond Semester 1430-1431H, 2009-2010G)

INSTRUCTORS: Dr. Al-Refeai, Dr. Al-Suhaibani, Dr. Al-Gahtani, and Dr. El-Shourbagy
Text Book: White, Case, and Pratt, "Principles of Engineering Economic Analysis," 5th Edition.

 

GE 401: Engineering Economy  

Course Description:

Cost concepts. Time value of money operations. Measuring the worth of investments. Comparison of alternaives.Depreciation.Economic analysis of public projects. 3 (3,1,0)

Course learning Objectives

Students completing this course successfully will be able to

 1.      Understand the fundamental concepts of engineering economy.

2.      Derive and use the engineering economy factors to account for the time value of money.

3.      Understand and use interest rates and cash flows in engineering practice.

4.      Consider inflation in an engineering economical analysis.

5.      Understand and apply tools for evaluating alternatives.

6.      Making decisions on real world projects.

7.      Understand the concepts of replacements of aged systems.

8.      Understand Methods of Depreciation

9.      Understand Economical Analysis of Public Projects

10.  Improve the communication skills, including reading, writing, oral presentations.

Topics Covered

1.      Cost Concepts: Life Cycle, Past / Sunk, Opportunity, Direct / Indirect / Overhead, Fixed / Variable (Break-Even), and Average / Marginal Costs. (8 hrs)

2.      Time-Value of Money and Equivalence: Compounding and Discounting Formulas, Cash Flow Diagrams and Equivalence, Uniform, Geometric, and Gradient Series, Nominal / Effective and Changing Rates of Return, and Inflation. (12 hrs)

3.      Measure of Worth: Cost of Capital and MARR, PW, FW, EUAW, IRR, ERR, SIR; Capitalized Worth, and Capital Recovery. Comparison of Alternatives: Mutual Exclusiveness, Planning Horizons, Total Cash Flow Approach, and Incremental Approach. (12 hrs)

4.      Replacement and Capacity Expansion Analysis: Insider's and Outsider's View. (6 hrs)

5.      Depreciation. (3 hrs)

6.      Economical Analysis of Public Projects. (4 hrs)

Chapter

Topics

Homework

1

Introduction to Engineering Economic Analysis: Time value of money, Principles of Engineering Economic Analysis, Economic Analysis Techniques.  Sections 1-2, 1-3, 1-4

 

2

 

 

 

Time Value Of Money: Cash Flow Diagrams, Simple Interest Calculations, Compound  Interest Calculations, Multiple Compounding Periods in a year and Continuous Compound  Interest Calculations.
Sections: 2-1, 2-2, 2-3, 2-4, 2-5, 2-6, 2-A.

6, 8, 9, 13, 15, 16, ,24, 32, 56, 90, 98, 130, 156, 164, 172.

3

Equivalence and Indiffrence . Section 3-7, 3-9

40, 41, 42, 43, 44, 45

4

Comparison of Alternatives:, Choosing Planning Horizons,  Sections: 4-1, 4-2

4, 5, 6

 

 

5

 

 

 

 

 

 

 

6

 

 

7

 

 

 

8

Measure of Worth:
Present Worth Analysis
: Single Alternative, Multiple Alternatives, One shot investiment, Sections: 5-3, 5-4, 5-5
Discount Payback Period
: Single
Alternative, Multiple Alternatives, Sections: 5-6, 5-7
Capitalized Worth:
Single Alternative, Multiple Alternatives, Sections: 5-8, 5-9
Fut ur Worth Analysis
: Single Alternative, Multiple Alternatives, One shot investiment, Sections: 6-2, 6-3, 6-5
Annual Worth Analysis
: Single Alternative, Multiple Alternatives, Least Common Multiple of Lives Assumption, Sections: 7-2, 7-3, 7-4
Capital Recovery Cost
: Section 7-6
Internal Rate of Return:
Single Alternative, Multiple Alternatives, Sections: 8-2, 8-3
External Rate of Return:
Single Alternative, Multiple Alternatives, Sections: 8-4, 8-5
Analizing Alternatives With no Positive Cash Flow : Section 8-6

CH5: 9, 10, 12, 13, 25, 27, 61, 62, 65, 66, 69, 72, 74



CH6:
4, 7, 9, 18, 31, 32, 36, 67, 68

CH7: 4, 5, 8, 23, 24, 25, 28, 51, 53, 60, 61, 63

CH8: 3, 5, 8, 15, 34, 51, 53, 54, 65, 68, 70

9

Depreciation.
Sections: 9.1, 9.3, 9.4, 9.5, 9.A ,9.B

9,10,11,12,13,14,46,47,48,49

11

Replacement Analysis: Sections 11-1, 11-2, 11-2-1, 11-3, 11-3-1, 11-5

 4, 5, 7, 23, 25

12

Inflation Effects: Before- Tax Analsis in Inflationary Conditions, Sections : 12-1, 12-2, 12-3.

1, 13, 15, 17, 20

14

Economic Analysis of Public Projects.Sections: 14.1 to 14.8

6, 8, 9, 13, 15

16

Cost Terminology: Life Cycle Viewpoint, Past/Future Viewpoint, Manufacturing Cost Structure  Viewpoint , Fixed/Variable  Viewpoint and Average/Marginal Viewpoint.Section  16-2

3, 4, 6, 10, 12

         Grade Distribution

            Quizzes and Attendence                                                             20% of final grade
            Midterm (7:00-8:30 PM)     Monday       19 – 05 – 1431 H           30%
 of final grade
                                                                         
03 – 05 – 2010 G
             Final Exam                                                                                   50% of final grade

__________________________________________

 

KING SAUD UNIVERSITY

College of Engineering

 

GE 401: Engineering Economy (before 1430-1431H)

 

INSTRUCTORS: Dr. Al-Refeai , Dr. Helmy, Dr. Zahw, Dr. El-Shourbagy, Dr. Ramadan

TEXT: White, Case, Pratt and Agee,  "Principles of Engineering Economic Analysis," 4th Edition.

(will be updated from 5th Edition) in following page

 j

Chapter

                                      Topics

  Homework

8

Cost Concepts: Life Cycle, Past / Sunk, Opportunity, Direct / Indirect / Overhead, Fixed / Variable (Break-Even), and Average / Marginal Costs.Sections: 8.1 and 8.2

2, 6, 7, 10, 12

2&3

Time-Value of Money and Equivalence: Compounding and Discounting Formulas, Cash Flow Diagrams and Equivalence, Annuity and Gradient Series, Nominal / Effective and Changing Rates of  Return, and Inflation.Sections: 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.7.1, 2.8, 2.9, 3.1,3.2, 3.3

4,7,10,13,15,17,

20,24,26,30,39,44,

46,54,57,62,70,80,

7, 8, 10

4

Measure of Worth: Cost of Capital and MARR, PW, FW, EUAW, IRR, ERR, SIR; PbP,  Capitalized Worth, and Capital Recovery.Sections: All Sections

 1,3,8,10,13,15,22,

27

5

Comparison of Alternatives: Mutual Exclusiveness, Planning Horizons, Total Cash Flow Approach, and Incremental Approach.Sections: 5, 5.1, 5.2, 5.3, 5.4, 5.6, 5.8, 5.9, 5.10

 

1,3,5,11,21,23,24

5

Replacement And Capacity Expansion Analysis: Insider's and Outsider's View.Sections: 5.11

35, 72, 73, 87, 96,

 103, 104

6

Depreciation.Sections: 6.1, 6.5, 6.10.1, 6.7, 6.11

9, 30, 31

7

Economic Analysis of Public Projects.Sections: All Sections

4, 6, 12, 14, 24

 

GRADE:

            

       Quizzes and Attendance                                    20% of final grade

 

   Midterm (7:00-8:30 PM)      Monday  29 – 04 – 1429 H    30% of final grade     

        05 – 05 – 2008 G

 

Final Exam                                                             50% of final grade

 Untitled ‭[1]‬

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