Defence Engineering College

Department of Basic and Applied Courses

Course Syllabus

1. Instructor Information

Name

Yalew Mekonnen

Office Location

Administration building office No. 46

Phone Number

0114338400 ext. 148

E-mail

yalewnati@gmail.com

Office Hours

2. Course Information

Course Name

Engineering Economics

Course Code

EC 3110

Credit hours

3-30

Prerequisite

AE 5412

3. Course Description

Aim: this course covers the basic of economic analysis from an engineering perspective. Because cost is such an important component in decision-making various techniques for comparing alternatives on an economic basis are presented. After completing the course, the student should be able to identify which alternative should be selected form two or more mutually exclusive alternatives on the basis of economic considerations.

Description:

Introduction to engineering economy, interest formulas & equivalence, economic analysis of alternatives, accounting depreciation & income taxes, estimating risk & uncertainty

4. Learning Outcomes

After the completion of the course the student will have the following attributes:

4.1 Knowledge

4.1.1

Students learn to apply knowledge of mathematics, economics and engineering principles to solve engineering problems.

4.1.2

Students develop an understanding of managerial accounting and economic principles

4.2 Intellectual and Practical skills

4.2.1

Students learn to use appropriate techniques, skills and tools to identify, formulate, analyze, and solve engineering economic problems using computer tools such as spreadsheets.

4.2.2

Students get practice in writing clearly, using graphics effectively, and justifying solutions to engineering economics problems.

4.3 Attitude and behavior

4.3.1

Appreciate the economics in an engineering environment and especially in defence industries and field organizations.

4.3.2

Develop competent capabilities to ensure optimization in utility of scarce resources, besides ensuring quality output.

5. Method of Instruction

Class lectures

3 fifty minutes lecture hours every week

Active learning (involves the full participation of students)

Teach inductively and to be followed by deductive assertions

Tutorial

Assignments as home work

Hold discussions on assignments

Study of lecture notes

This is fully the responsibility of the learner

Demonstrations

Will be given by the Technical assistant/Instructor

Lab assignments

Spread sheet and soft ware based assignments in computer lab

Group Assignment

Work in groups of not more than 4 members.

Recognize individual contribution.

Project

Not applicable.

6. Course Outline

Chapter

Week

Subject matter contents

Learning Outcomes

Assignments/activity (Tutorial hours)

Unit I

1(3 hrs)

Engineering & Engineering economy

Physical & economic efficiency

Engineering for economic competitiveness

Engineering economy & the engineer

4.1

Unit II

1 (3hrs)

Economic & cost concepts

Concepts of value & utility

Economic aspects of exchange

Life cycle cost

Time value, earning & purchasing power of money

4.1& 4.2

Assignment

Unit III

1(3hrs)

Interest formulas

Cash flows over time

Interest formulas & relationships

Compounding frequency considerations

4.1& 4.2

Assignment

Unit IV

1(3hrs)

Calculations of economic equivalence

Principles of equivalence

Equivalence calculations involving cash flow

Equivalence calculations involving bonds, loans & working capital

4.1& 4.2

Assignment

Unit V

1(3hrs)

Equivalence involving inflation

Measures of inflation & deflation

The inflation rate

Effects of inflation

Analyzing inflation in investments

4.1& 4.2

Assignment

Unit VI

1(3hrs)

Basis of comparison of alternatives

Present & future worth

Annual equivalent

Internal rate return

Payback period

Capitalized equivalence amount

Capital recovery with return

Project balance

4.1& 4.2

Assignment

Unit VII

1(3hrs)

Decision making among alternatives

Types of in vestment proposals

Forming mutually exclusive alternatives

Elements of decision criteria

Comparison based on total investment

Capital recovery with return

Project balance

4.1& 4.2

Assignment

Unit VIII

1(3hrs)

Evaluating production operations

Break even analysis

Operation & production decisions

Economic operation of equipment

Models for procurement operations

4.1& 4.2

Assignment

Mid Examination period

Unit IX

1(3hrs)

Evaluating replacement alternatives

Replacement analysis for unequal lives

The economic life of an asset

Replacement assumptions & decisions

Retirement or abandonment decisions

4.1& 4.2

Assignment

Unit X

1(3hrs)

Evaluating public projects

Welfare aim of government

Nature of public activities

Financing public activates

Benefit cost analysis

Cost effective analysis

4.1& 4.2

Assignment

Unit XI

1(3hrs)

Accounting & Depreciation accounting

Cost accounting & depreciation

Basic depreciation models

Modified accelerated cost recovery system

Units of production depreciation

4.1& 4.2

Assignment

Unit XII

1(3hrs)

Income taxes in economic analysis

Relation of income taxes to profit

Federal income tax for corporations

Effective income tax rates

Interest, depreciation & income tax

Tax credits

After tax cash flow analysis

4.1& 4.2

Assignment

Unit XIII

1(3hrs)

Estimating economic elements

Cost estimating methods & relationships

Adjustment of cost data

Estimating & allocating indirect costs

Judgment in estimating

4.1& 4.2

Assignment

Unit XIV

1(3hrs)

Estimates & decision making

Allowances for uncertainty in estimates

Considering a range of estimates

Sensitivity analysis

4.1& 4.2

Assignment

Unit XV

1(3hrs)

Decision under risk & uncertainty

Criteria for decisions under risk

Expected value decision making

Expectation variance decision making

Monte carlo analysis

Decision trees in decision making

4.1& 4.2

Assignment

Unit XVI

1(3hrs)

Decisions involving multiple criteria

Direct ranking methods

Systematic elimination

Weighting methods of evaluation

Decision evaluation display

4.1& 4.2

Assignment

18

Final Examination period

7. Laboratory activities

No laboratory

8. Required Text and Reference

Text Book

1. Thuesen GJ, Fabrycky WJ, Engineering Economy, 6th ed., Prentice Hall inc, New jersey, 1984

Reference Books

1. Wiilam Sullivan G, Elin M Wicks, James Luxhoj T, Engineering Economy, 13th ed., Pearson Education inc., New Jersey, 2006

2. Donald G Newnan, Jerome p Levelle, Ted G Eschenbach, Engineering Economic Analysis, 10 th edition, Ed wheeler

3. Jose Sepulveda , William Souder , Byron Gottfried, Schaum's Outline of Engineering Economics, Latest edition, McGraw Hill

Software Required

No required software

9. Assessment

Type

Weight

Due date

Behavior and Criteria

Mid semester Exam

25%

9th week of the semester

Examination will be set to address learning outcomes 4.1.1, 4.1.2, 4.2.1, 4.2.2 and the criteria is to get all questions answered correctly

Final semester Exam

45%

18th week of the semester

Examination will be set to address learning outcomes 4.1.1, 4.1.2, 4.2.1, 4.2.2 and the criteria is to get all questions answered correctly

Group Assignment

10%

14th week

Questions will be given on the 7th week in such way that to the following outcomes 4.1.1, 4.1.2, 4.2.1 and 4.2.2.

Individual assignment

10%

TBD

10. Academic Honesty

Copying from any outside sources (e.g. Fellow students, and Internet, etc.) on any material to be graded is not permitted, and will be considered cheating. Cheating will result in failure of the assignment, failure of the class and/or face possible disciplinary action. Each student is responsible for securing his or her work from copying. Each student is expected to abide by college policies on academic conduct.

11. Due Date

All assignments must be turned in the class on the due date for full credit. No assignment will be accepted after class on the due date. Since the group assignment is due in week 15, papers for this presentation should be submitted before one week of the 15th week. Failure of submission and presentation of the group assignment in week 14 will be awarded as zero out of 10 points.

12. Classroom Behavior

Anything that disturbs your instructor or your colleagues during the class period is considered a troublesome behavior. Examples include: Using mobiles, PDA, making offensive remarks, sleeping, working on assignments related to other courses, etc. troublesome behaviors are completely prohibited.

13. Approval (Affidavit)

Name

Signature

Date

Instructor:

Section Head:

Department Head:

3

3