Engineering Economics Analysis (Part 1 Of 2)

Feasibility Study, Project Appraisal, Project Valuation, Economic Investment Decision-Making

What you’ll learn
Main concept of time value of money
Simple and compound interest rates
Economic Equivalence with different cash flows (e.g. single, uniform, gradient, etc.)
How to differentiate between “Nominal” and “Effective” interest rates
How to deal with multiple compounding of interests
How to deal with changing interest rates over time
How analyze a commercial loan
How to consider inflation in your analysis
How to measure the profitability of an investment
How to compare between independent and/or mutually exclusive investments
Requirements
Basics in mathematics
Description
Any engineering or non-engineering project, business, or investment usually starts by mixed virtual ideas and thoughts. To be translated into reality, such ideas will require several resources, in which the “capital cost” is the most essential. However, before investing our capital cost, several questions need to be answered from an “economic” perspective, such as:- Is the expected return from the project or investment worth the capital cost?- Are there other alternatives?- What are the other alternatives?- Which alternative is the best?- What is the confidence level of my selected alternative?- Etc.Engineering Economic Analysis can answer these questions and more. In other words, this course is all about decision making from an economic perspective. The term “Engineering” exists as this course will be focusing more on engineering projects. However, the same concept can be applied for non-engineering projects (e.g. importing and selling goods, adopting a new accounting system in your firm, etc.).Even on a personal level, we deal with “money” on a daily basis. Thus, this course can also help us to understand the management of money and to take economic decisions such as:- Buy or lease a car,- Open a saving account in Bank (A) or (B),- How much saving shall I make each month to have $500K in my account 20 years from now?- Etc.This course is divided into two parts with a total of 101 carefully selected examples solved in details to ensure you understand the concept. The main topics that will be covered in part (1) are as follows (see the course contents for more details):- Time Value of Money- Economic Equivalence- Nominal and Effective Interest Rates- Commercial Loans- Inflation- Measuring Worth of Investments- Comparison of InvestmentsWhile, the main topics to be covered in part (2) are as follows:- Supplementary Analysis- Capital Budgeting- Depreciation- Taxation- Replacement Analysis- Economic Analysis in Public Sector- MARR Selection

Overview

Section 1: SECTION (1): INTRODUCTION

Lecture 1 Lec. (1.1) Welcome

Lecture 2 Lec. (1.2) Project Life Cycle Stages

Lecture 3 Lec. (1.3) What is a Feasibility Study?

Lecture 4 Lec. (1.4) Feasibility Study Process

Lecture 5 Lec. (1.5) What is Engineering Economic Analysis?

Lecture 6 Lec. (1.6) Engineering Economic Analysis Steps

Lecture 7 Lec. (1.7) Cost Terminologies

Lecture 8 Lec. (1.8) Topics to be covered in Part (1)

Lecture 9 Lec. (1.9) Course Management Recommendations

Section 2: SECTION (2): TIME VALUE OF MONEY

Lecture 10 Examples on Section 2

Lecture 11 Lec. (2.1) Time Value of Money Concept

Lecture 12 Lec. (2.2) Cash Flow Diagrams

Lecture 13 Lec. (2.3) Interest and Interest Rate

Lecture 14 Lec. (2.4) Types of Interest Rate

Section 3: SECTION (3): ECONOMIC EQUIVALENCE

Lecture 15 Economic Equivalence Interest Tables

Lecture 16 Examples on Section 3

Lecture 17 Lec. (3.1) Economic Equivalence Concept

Lecture 18 Lec. (3.2) Single Cash Flow

Lecture 19 Lec. (3.3) Uniform (Equal) Series Cash Flow

Lecture 20 Lec. (3.4) Uneven (Irregular) Series Cash Flow

Lecture 21 Lec. (3.5) Arithmetic (Linear) Gradient Series Cash Flow

Lecture 22 Lec. (3.6) Geometric Gradient Series Cash Flow

Lecture 23 Lec. (3.7) Composite Cash Flow

Section 4: SECTION (4): MONEY MANAGEMENT

Lecture 24 Examples on Section 4

Lecture 25 Lec. (4.1) Money Management Aspects

Lecture 26 Lec. (4.2) Multiple Compounding Periods Concept

Lecture 27 Lec. (4.3) Nominal and Effective Interest Rates

Lecture 28 Lec. (4.3A) Case 1 (Approach 1)

Lecture 29 Lec. (4.3B) Case 2 (Approach 2)

Lecture 30 Lec. (4.3C) Case 2 (Approach 3)

Lecture 31 Lec. (4.3D) Case 3 (Approach 4)

Lecture 32 Lec. (4.3E) Approaches Summary

Lecture 33 Lec. (4.4) Changing Interest Rates

Lecture 34 Lec. (4.5) Amortized Loans

Lecture 35 Lec. (4.6) Add-On Loans

Lecture 36 Lec. (4.7) Customized Loans

Lecture 37 Lec. (4.8) Inflation

Section 5: SECTION (5): MEASURING WORTH OF INVESTMENTS

Lecture 38 Examples on Section 5

Lecture 39 Lec. (5.1) Project Cash Flow

Lecture 40 Lec. (5.2) Measuring Worth of Investments Methods

Lecture 41 Lec. (5.3) Payback Period Method

Lecture 42 Lec. (5.4) Net Present Worth Method

Lecture 43 Lec. (5.5) Net Future Worth Method

Lecture 44 Lec. (5.6) Net Annual Worth Method

Lecture 45 Lec. (5.7) Internal Rate of Return (IRR) Method

Lecture 46 Lec. (5.7A1) IRR Direct Solution Method

Lecture 47 Lec. (5.7A2) IRR Trial and Error Method

Lecture 48 Lec. (5.7A3) IRR Computer Solution Method

Lecture 49 Lec. (5.7B) IRR for Non-Simple Investments

Lecture 50 Lec. (5.7C) Limitations of IRR Method

Lecture 51 Lec. (5.8) External Rate of Return Method

Lecture 52 Lec. (5.9) Saving / Investment Ratio Method

Lecture 53 Lec. (5.10) Capitalized Equivalent Method

Section 6: SECTION (6): COMPARISON OF INVESTMENTS

Lecture 54 Examples on Section 6

Lecture 55 Lec. (6.1) Types of Projects/Investments

Lecture 56 Lec. (6.2) Independent and Mutually Exclusive Projects

Lecture 57 Lec. (6.3) Ranking Approach

Lecture 58 Lec. (6.4) Incremental Approach

Lecture 59 Lec. (6.5) Analysis Period and Useful Life

Lecture 60 Lec. (6.6) Time Span Equalizing

Project managers,Financial managers,Investors,Engineers (any discipline),Potential Engineers in USA or Canada acquiring their “Professional Engineering” registration,Engineering students (any discipline),Business or Economics students