COURSE OUTLINE

Course No.
Course Title
Course Description

:
:
:

BES 4
Engineering Economy

Number of Units
No. of Contact Hours
Academic Year

:
:
:

3
3
1st Semester (2016 2017s)

Course Objectives

At the end of the semester, the students are expected to:

Concepts of the time value of money and equivalence; basic economy study
methods; decisions under certainty; decisions recognizing risk; and decisions
admitting uncertainty.

1.
2.

3.

Grading System

Solve problems involving interest and the time value of money;

Evaluate project alternatives by applying engineering economic
principles and methods and select the most economically efficient one;
and
Deal with risk and uncertainty in project outcomes by applying the basic
economic decision making concepts.

GRADING COMPONENT

Percentage

Class
Standing
:
Quizzes,
Class
Assignments/Home works/Attendance
Project / Subject Requirement
Periodic Examination ( Prelim)
Sub Total Rating (1)
Class
Standing
:
Quizzes,
Class
Assignments/Home works/Attendance
Project / Subject Requirement
Periodic Examination ( Midterm )
Sub Total Rating (2)

Participation,

Class
Standing
:
Quizzes,
Class
Assignments/Home works/Attendance
Project / Subject Requirement

Participation,

Periodic Examination ( Midterm )

Sub Total Rating (3)
Equivalent Rating:

50%
20%
30%
100%
Participation,
50%
20%
30%
100%

50%
20%
30%
100%

Cumulative Rating
= Prelim Grade

11% of Over-all Rating

1/3 of Prelim Grade + 2/3 of
the sub-total Rating (2) =
Midterm grade
22% of Over-all Rating
1/3 of Midterm Grade + 2/3
of the sub-total Rating (3) =
Final Grade
67% of Over-all Rating

1 99/100, 1.1 98. 1.2 97, 1.25 96. 1.3 95, 1.4 94, 1.5 93, 1.6 92, 1.7 91, 1.75
90, 1.8 89, 1.9 88, 2.0 87, 2.1 86, 2.2 85, 2.25 84, 2.3 83, 2.4 82, 2.5 81, 2.6
80, 2.7 79, 2.75- 78. 2.8 77, 2.9 76, 3.0 75, 4.0 Conditional ( For mid-term only) and
5.0 Failed.

Course Content

:
I.

Orientation
CNSC Vision, Mission, Unit Goals and Objectives
get at overview of the topics to be covered in the whole semester;
have an idea of what is to be expected during lessons and discussions;
know certain rules and policies governing the whole class;
Be aware of the requirements and grading system of the course.

IIIIIIi
II. Introduction
2.1. Definitions
2.2. Principles of Engineering Economy
2.3 Engineering Economy and the Design Process
2.4. Cost Concepts for Decision Making
2.5. Present Economy Studies

III. Money-Time Relationships and Equivalence

3.1. Interest and the Time Value of Money
3.2. The Concept of Equivalence
3.3. Cash Flows
IV. Depreciation

V. Basic Economy Study Methods

5.1. The Minimum Attractive Rate of Return
5.2. The Present Worth Method
5.3. The Future Worth Method
5.4. The Annual Worth Method
5.5. The Internal Rate of Return Method
5.6. The External Rate of Return Method
5.7. The Payback Period Method
5.8. The Benefit/Cost Ratio Method
VI.

Decisions Under Certainty

6.1.
Evaluation of Mutually Exclusive Alternatives
6.2.
Evaluation of Independent Projects
6.3.
Depreciation and After-Tax Economic Analysis
6.4
Replacement Studies
6.5
Break even Analysis

VII. Decisions Recognizing Risk

7.1.
Expected Monetary Value of Alternatives
7.2.
Discounted Decision Tree Analysis
VIII. Decisions Admitting Uncertainty
8.1.
Sensitivity Analysis
8.2.
Decision Analysis Models

References

Sullivan, William G., Elin M. Wicks and James T. Luxhoj. Engineering Economy, 12th
ed. Prentice Hall, Inc., 2002.
Blank, Leland T. and Anthony J. Tarquin. Engineering Economy, 6th ed. McGraw-Hill,
Inc., 2005.
Grant, Eugene L., et al., Principles of Engineering Economy, 8th ed. John Wiley &
Sons, Inc., 1990.
Newman, Donald G., Jerome P Lavelle and Ted S. Eschenbach. Essentials of
Engineering Economic Analysis, 2nd ed., Oxford University Press, 2002.
Park, Chan S. Contemporary Engineering Economics, 3rd ed. Addison Wesley, 2001.
Riggs, James L., et al. Engineering Economics, 4th ed., McGraw-Hill, 1996.
Thuesen, Gerald J. and W.J. Fabrycky. Engineering Economy, 9th ed. Prentice Hall,
Inc., 2001.

Prepared by :

Engr. Maria Senen L. Dimaano-Bongulto

Instructor