PHS 4555 ENGINEERING ECONOMY
3 Credit Hours
Student Level:
This course is open to students on the college level in either the Freshman or Sophomore year.
Catalog Description:
PHS4555 ENGINEERING ECONOMY (3 hrs.)
A method of economic evaluation of engineering alternatives and design, Time value for money and economic impact of taxes, risk and depreciation. This course requires the students to have access to a computer and a TI 89 graphing calculator
Course Classification: Lecture
Prerequisites:
A minimum grade of C in MTH4435  Calculus 1
Controlling Purpose:
To Equip the Science and PreEngineering students with the knowledge of economic evaluation of engineering alternatives and design, Time value for money and economic impact of taxes, risk and depreciation
Learner Outcomes:
Upon completion of the course, the student will be able to understand and apply fundamental concepts of economic analysis to engineering projects and analysis, apply and utilize specific techniques including present worth, annual equivalent worth, rate of return and others. Appreciate effects of inflation on economic evaluation and account for the impact of depreciation and tax regulations
Units Outcomes and Clock Hours of Instruction for Core Curriculum:
The following outline defines the minimum core content not including the final examination period. Instructors may add other material as time allows.
UNIT 1: INTRODUCTION TO ENGINEERING ECONOMY4hrs (Chapters 1)
Outcomes: Upon completing this unit, the student should be able to understand and apply the basic concept and use terminology of engineering economics
 Define engineering economics and describe its role in making decisions
 Understand steps used in engineering economy study
 Evaluate ethical decisions
 Perform calculations for interest rates and rates of return, simple interest and compound interest
 Identify and use engineering terminology
 Graphically represent cash flow
UNIT 2: INTEREST RATES AND ECONOMIC EQUIVALENCE  8 hrs. (Chapters 2, 3 and 4)
Outcomes: Upon completing this unit, the student should be able to derive and use engineering economy factors to account for the time value of money and economic equivalence.
 Understand derivations of commonly used engineering factors that consider time value for money
 Combine engineering economy factors and spreadsheet functions to make equivalence calculations
 Understand and use nominal and effective interest rates in engineering or daily practices.
UNIT 3: PRESENT WORTH AND ANNUAL WORTH ANALYSIS  8hrs. (Chapters 5 and 6)
Outcomes: Upon completing this unit, the student should be able to evaluate most engineering projects proposals using wellaccepted economic analysis techniques
 Demonstrate the ability to understand how to organize an economic analysis
 Utilize different present worth (PW) techniques to evaluate and select alternatives.
 Utilize different annual worth (AW) techniques to evaluate and select alternatives.
UNIT 4: RATE OF RETURN ANALYSIS 8hrs. (Chapters 7 and 8)
Outcomes: Upon completing this unit, the student should be able to perform ROR evaluations of a single project
 Understand the meaning of rate of return(ROR)
 Use a PW or AW relations to calculate ROR
 Perform ROR evaluations for a single project
 Perform incremental cash flows for ROR analysis
 Evaluate incremental ROR analysis of Multiple alternatives
UNIT 5: BENEFIT/COST ANALYSIS  4hrs. (Chapter 9)
Outcomes: Upon completing this unit, the student should be able to understand public sector projects and select the best alternative on the basis of incremental benefit/cost analysis
 Explain some of the basic differences between private and publicsector projects
 Calculate benefit/cost ratio and its use to evaluate a single project
UNIT 6: DECISION STUDIES ON REAL WORLD PROJECTS 4HRS. (Chapters 11 and 13)
Outcomes: Upon completing this unit, the student should be able to perform replacement /retention and Breakeven analysis
 Explain the fundamental approach and terminology of replacement analysis
 Perform a replacement/retention study between a defender and the best challenger
 Calculate the minimum market(tradein) value required to make the challenger economically attractive
 Determine the breakeven point of a parameter for one or two alternatives
 Calculate the payback period of a project
UNIT 7: INCLUDING INFLATION, DEPRECIATION AND INCOME TAXES IN ECONOMIC STUDIES 8hrs (Chapters 14, 16 and 17)
Outcomes: Upon completing this unit, the student should be able to consider the effects of inflation, use depreciation/depletions methods and perform aftertax economic evaluations in economic studies
 Demonstrate the difference that inflation makes on money now and money in future
 Explain deflation
 Calculate the PW of cash flows with adjustments for inflation
 Define and use basic terms of asset depreciation
 Apply straight line(SL), declining balance(DB) and double declining balance (DDB) methods of depreciation
 Explain depletion; apply cost depletion methods
 Know the fundamental terms and relations of aftertax analysis
 Determine cash flow before tax(CFBT) and cash flow after tax(CFAT)
 Understand the impact of pertinent tax regulations on income taxes and depreciation
UNIT 8: COST ESTIMATION AND INDIRECT COST ALLOCATION  4 hrs. (Chapter 15)
Outcomes: Upon completing this unit, the student should be able to make cost estimates using different methods.
 Explain bottom up and design to cost (top down) approaches to cost estimation
 Use the unit meth to make preliminary cost estimate
 Use the cost index ratio and cost capacity equations to perform cost estimations
 Explore ethics and profit dilemma
Projects Required:
Term project required.
This includes an Economics of the Business and Operations Plan with summary of assumptions, alternatives considered analysis of alternatives and sensitivity analysis based on the knowledge the student has gained throughout the semester.
Textbook:
Engineering Economy, L. Blank, A.Tarquin, 7^{th} ed., 2011, McGraw Hill. Please contact Cowley Bookstore for current textbook.
Materials/Equipment Required:
Access to a computer for quizzes and use of Blackboard resources. Computers will be available to the student in the Computer Lab.
Attendance Policy:
Students should adhere to the attendance policy outlined by the instructor in the course syllabus.
Grading Policy:
The grading policy will be outlined by the instructor in the course syllabus.
Maximum class size:
Based on classroom occupancy
Course Time Frame:
The U.S. Department of Education, Higher Learning Commission and the Kansas Board of Regents define credit hour and have specific regulations that the college must follow when developing, teaching and assessing the educational aspects of the college. A credit hour is an amount of work represented in intended learning outcomes and verified by evidence of student achievement that is an institutionallyestablished equivalency that reasonably approximates not less than one hour of classroom or direct faculty instruction and a minimum of two hours of outofclass student work for approximately fifteen weeks for one semester hour of credit or an equivalent amount of work over a different amount of time. The number of semester hours of credit allowed for each distance education or blended hybrid courses shall be assigned by the college based on the amount of time needed to achieve the same course outcomes in a purely facetoface format.
Refer to the following policies:
402.00 Academic Code of Conduct
263.00 Student Appeal of Course Grades
403.00 Student Code of Conduct
Disability Services Program:
Cowley College, in recognition of state and federal laws, will accommodate a student with a documented disability. If a student has a disability which may impact work in this class and which requires accommodations, contact the Disability Services Coordinator.
