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Intro to engineering economy

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Kwesi Kissiedu
Kwesi Kissiedu

The document discusses the importance of engineering economy in decision making for individuals, businesses, and government agencies. Engineering economy provides quantitative analysis techniques to evaluate and compare the costs and benefits of project alternatives over time. It helps structure the estimates needed to evaluate alternatives and select the most economically favorable option based on metrics like present worth, rate of return, and benefit-cost ratio.

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ENGINEERING ECONOMY Introduction
IMPORTANCE OF ENGINEERING ECONOMY -1 ,[object Object],[object Object]
IMPORTANCE OF ENGINEERING ECONOMY - 2 ,[object Object],[object Object]
Importance of Engineering Economy - 3 ,[object Object]
Corporations and Businesses ,[object Object],[object Object],[object Object]
Government Units Which Serve the Public ,[object Object],[object Object],[object Object]
Individuals ,[object Object],[object Object],[object Object]
ROLE OF ENG. ECONOMY IN DECISION MAKING -1 ,[object Object]
Steps to Problem Solving ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
ROLE OF ENG. ECONOMY IN DECISION MAKING -2 ,[object Object],[object Object],[object Object]
Example 1 ,[object Object],[object Object],[object Object]
Solution ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Step 4 Step 4: This is the heart of engineering economy. The technique result in numerical values called measures of worth, which inherently consider the time value of money. Some common measures of worth are, Present worth (PW) Future worth (FW) Annual worth (AW) Rate of return (ROR) Benefit/cost ratio (B/C) Capitalised cost (CC)
Solution ,[object Object],[object Object]
Solution - continued ,[object Object],[object Object]
Solution - continued ,[object Object],[object Object]
Step 5: ,[object Object],[object Object]
Solution - continued ,[object Object]
The time value of money ,[object Object],[object Object],[object Object],[object Object]
INTEREST CALCULATIONS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
SIMPLE AND COMPOUND INTEREST ,[object Object],[object Object]
EQUIVALENCE ,[object Object],[object Object],[object Object],[object Object]
SYMBOLS AND THEIR MEANING ,[object Object],[object Object]
SYMBOLS AND THEIR MEANING ,[object Object],[object Object]
SYMBOLS AND THEIR MEANING ,[object Object],[object Object]
INTEREST CALCULATIONS ,[object Object],[object Object]
MINIMUM ATTRACTIVE RATE OF RETURN ,[object Object],[object Object]
MINIMUM ATTRACTIVE RATE OF RETURN ,[object Object],[object Object],[object Object],[object Object]
MINIMUM ATTRACTIVE RATE OF RETURN ,[object Object],[object Object]
CASH FLOWS: THEIR ESTIMATION AND DIAGRAMMING ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CASH FLOWS: THEIR ESTIMATION AND DIAGRAMMING ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CASH FLOWS: THEIR ESTIMATION AND DIAGRAMMING ,[object Object],[object Object],[object Object],[object Object]
A typical cash‑flow time scale for 5 years.
CASH FLOWS: THEIR ESTIMATION AND DIAGRAMMING ,[object Object],[object Object]
Example of positive and negative cash flows.
RULE OF 72: ESTIMATING DOUBLING TIME AND INTEREST RATE ,[object Object],[object Object]
ESTIMATION n GIVEN i ,[object Object],[object Object],[object Object]
Estimation i given n ,[object Object],[object Object],[object Object]

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Intro to engineering economy

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  • 13. Step 4 Step 4: This is the heart of engineering economy. The technique result in numerical values called measures of worth, which inherently consider the time value of money. Some common measures of worth are, Present worth (PW) Future worth (FW) Annual worth (AW) Rate of return (ROR) Benefit/cost ratio (B/C) Capitalised cost (CC)
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  • 33. A typical cash‑flow time scale for 5 years.
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  • 35. Example of positive and negative cash flows.
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