PHS 4555 ENGINEERING ECONOMY
3 Credit Hours
This course is open to students on the college level in either the Freshman or Sophomore year.
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
A minimum grade of C in MTH4435 - Calculus 1
To Equip the Science and Pre-Engineering students with the knowledge of economic evaluation of engineering alternatives and design, Time value for money and economic impact of taxes, risk and depreciation
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 ECONOMY-4hrs (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 well-accepted 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 public-sector 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(trade-in) 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 after-tax 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 after-tax 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
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.
Engineering Economy, L. Blank, A.Tarquin, 7th ed., 2011, McGraw Hill. Please contact Cowley Bookstore for current textbook.
Access to a computer for quizzes and use of Blackboard resources. Computers will be available to the student in the Computer Lab.
Students should adhere to the attendance policy outlined by the instructor in the course syllabus.
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 institutionally-established equivalency that reasonably approximates not less than one hour of classroom or direct faculty instruction and a minimum of two hours of out-of-class 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 face-to-face 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.