Master Engineering Economics: Evaluate Business & Projects

What you will learn:

Grasp the fundamentals of economic analysis for informed decision-making in engineering.
Apply proven cost estimation and alternative analysis techniques in practical engineering scenarios.
Demonstrate expertise in cost estimation techniques and probabilistic risk analysis.
Master linear programming concepts for optimizing economic resources in projects.
Evaluate and confidently select the best alternatives using robust economic analysis techniques.
Gain a deep understanding of the time value of money and its application in financial planning.
Develop a thorough understanding of depreciation concepts to make sound decisions about asset utilization and replacements.

Description

Dive deep into the essential principles of engineering economics, a field that empowers you to make informed decisions about engineering projects and business ventures. This comprehensive course, previously known as engineering economy, delves into the microeconomic aspects of resource allocation, guiding you through the intricacies of decision-making in the face of limited resources.

Learn to apply economic principles to real-world engineering challenges, leveraging the power of mathematics and statistics to analyze and evaluate various alternatives. You'll gain a solid understanding of cost concepts, time value of money, depreciation, and project evaluation techniques, enabling you to confidently choose the most economically viable solutions.

The course covers key topics, including:

Fundamentals of Economics: Explore the principles of demand and supply, market structures, and consumer and producer behavior.
Time Value of Money: Master the concepts of simple and compound interest, annuities, and cash flow diagrams to analyze investments and project returns over time.
Cost Analysis: Understand different cost categories, including fixed, variable, and opportunity costs, and learn to apply cost-benefit analysis and break-even analysis.
Project Evaluation: Utilize various methods, such as present worth analysis, future worth analysis, and annual worth analysis, to compare and select the best project alternatives.
Linear Programming: Learn to optimize resource allocation and maximize project profitability using linear programming techniques.
Depreciation: Explore different depreciation methods and their application in asset valuation and tax planning.
Payback Period and IRR: Evaluate project viability through payback period calculations and internal rate of return analysis.

This course is your gateway to making smart economic decisions in the engineering and business world. Join us and gain the knowledge and skills you need to succeed!

Curriculum

Introduction to Economics

This section lays the foundation of economic principles that are essential for understanding engineering economics. You'll learn the difference between wants and desires, explore the concepts of macro and microeconomics, and delve into the theory of demand and supply. By the end of this section, you'll grasp the fundamentals of market equilibrium and elasticity, as well as the various types of businesses and market structures.

Understanding the Time Value of Money

This section delves into the critical concept of the time value of money, which is fundamental for evaluating investments and projects. You'll explore simple and compound interest calculations, learn to create cash flow diagrams, and master the concepts of annuities and deferred annuities. You'll also learn about gradient problems, nominal and effective interest rates, and the equivalence relation between payment periods and compounding periods.

Evaluating Engineering Projects

This section equips you with the tools to evaluate and compare engineering projects. You'll learn about the present worth method, future worth method, and annual worth method for decision-making. You'll also gain insights into comparing business alternatives and applying the concepts to real-world scenarios.

Linear Programming in Economics

Discover the power of linear programming as a tool for optimizing resource allocation and maximizing project profitability. You'll learn about objective functions, constraints, and the main elements of linear programming. This section includes a case study of the Reddy Mikks Company model to illustrate real-world applications.

Payback Period and Project Evaluation

This section covers various methods for evaluating project feasibility. You'll learn how to calculate payback periods, both with even and uneven cash flows, and explore the concept of discounted payback. You'll also delve into internal rate of return analysis, incremental cash flow analysis, and mutually exclusive project analysis. This section concludes by discussing replacement decision analysis and the economic life of assets.

Depreciation

This section explains the concept of depreciation, essential for understanding the value of assets over time. You'll learn about the different types of depreciation, explore various depreciation methods like straight-line, sum of the year's digits, and declining balance methods. You'll also be introduced to the Modified Accelerated Cost Recovery System (MACRS) and its applications.

Cost Concepts in Economics

This section dives into the various cost concepts that are crucial for business decision-making. You'll learn about fixed and variable costs, prime costs, conversion costs, and other cost categories. You'll also explore the concepts of cost-volume-profit analysis and break-even points, understanding how these factors influence profitability. Finally, you'll discover how to evaluate projects using the benefit-cost ratio method and its limitations.

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