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Dedication
This presentation is dedicated
to the

Students
Of Today’s Class
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N on-technical skills and know ledge areas that an engineer should

acquire

Economics

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A dapted from Redm ill : 133
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 Engineering
Economics
Course Code: ECO-132

Credit Hours : 3+0

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 Engineering
Economics

 Engineering Economics is the

application of economic techniques
to the evaluation of design and
engineering alternatives.

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He
ad
lin
e s

7
Lecture Headlines
1)Introduction to Engineering Economics

2) Basic cost concepts

3) Time value of money and discounted cash flow

calculations

4) Comparing alternatives

5) Public sector engineering economy

6)Private
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1) Introduction to Engineering Economics

 Economics vs. Engineering economics;

 Typical problems addressed by Engineering

Economy studies

 Public sector,

 Private sector,

 Engineering economics studies

 Demand, Supply and Equilibrium

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2) Basic Cost and
Revenue Concepts
Basic terms and concepts –

 Cost (Fixed, Variable, Average, Marginal,

Sunk Cost)
 Revenue (Average, Marginal in SR & LR)
Break-even Analysis
 Profit Maximization,

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3) Time value of money and
discounted cash flow calculations
What is interest;
 Simple interest;
 Compound interest –
 Nominal vs. effective interest;
 Continuous compounding;
Time-value equivalencies;
Compound interest factors;
The functional notation system;
Cash flow diagrams;
Solving
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4) Comparing alternatives
Identifying and defining alternatives;

Present worth comparisons;

Equivalent annual worth comparisons;

Rate of return comparisons

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5) Public sector and Private Sector
Engineering Economics

Concept of the Public Sector;

Sources and Costs of capital;
Income tax considerations
The discount rate question;
Incentives for Private Sector Investment
Benefit-Cost Analysis and Applications

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Text book
Donald E. Newnan, Engineering Economic
Analysis, 9th Ed.
Reference book
Contemporary Engineering Economics: by
Park et al, Pearson
Principles of Economics by Sameulson 13th
Edition
Applied Mathematics for Business Economics
and the Social Sciences by Frank S Budnick
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Weightage
One Hour Tests : 30 %
Quizzes : 15%
Assignments : 10%
End Semester Exam : 45 %

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 Any Question ?

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