GENG 408 Engineering Economics Course Syllabus PDF

William V. S.
Tubman University
Harper, Maryland County, Republic of Liberia
P.O. Box 3570 Harper, Maryland County, Republic of Liberia
Monrovia Office: 15th & Tubman Boulevard, Sinkor, Monrovia.
Email: info@tubmanu.edu.lr Website: www.tubmanu.edu.lr
Engr. Sylvester Jemigbeyi PMP, MNSE, MSc (UI), BEng Email: sj_jemigbeyi@tubmanu.edu.lr
Associate Professor, Mechanical Engineering Dept., Alt. email: sylvesterjemigbeyi@asme.org
College of Engineering & Technology Cell: +233888655046, +2348035716342,
Freelance Consultant - Project Planning & Control Skype: Slyniche
COURSE SYLLABUS
GENG 408
Engineering Economics
…making rational techno-economic decisions
© 2018. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

Skype: Slyniche; sj_jemigbeyi@tubmanu.edu.lr; sylvesterjemigbeyi@gmail.com; +231888655046; +2348035716342
William V. S. Tubman University
Course Code / Title: GENG 408 / Engineering Economics

Class Days / Time: Tuesdays & Thursdays / 8:00 – 9:30AM
Class Space: Computer Laboratory B
Google Classroom Account: Class name: GENG 408 – Engineering Economic_Prof SJ;
Class code: ib2eql
Course Description: Examines the technical approaches to evaluating engineering economics

alternatives, involving resources investment for materials, equipment, labor and services, with a drive
to making rational, techno-economic viable decisions. In the broader context, the course equips
students with the requisite skillset to optimize the techno-economic performances of engineering
operations (product management though its lifecycle, waste management, technologies management
etc.) and projects (product developments, Irrigation, electrification etc.). The concepts of time value
of money and economic equivalence are integral to the course; Microsoft Excel shall be deployed for
financial formulations and computations.
Prerequisite: Math 101 & 102, CSE 101 & 102, EED 301 (Entrepreneurship Education I), Junior
standing (six semesters satisfactorily completed)
Core Objectives: To understand the technical approaches to practising financial project analyses of
technological / engineering activities within any given organization structure. Engineers are expected
to coherently cost engineering designs, rationally and intelligently examine design alternatives
(choices), and succinctly make convincing presentation to key stakeholders why an alternative should
be pursued. Specifically, the course will enable students to:
i. Grasp the concept of the time value of money and economic equivalence;
ii. Develop and analyse cash flow diagrams using present worth, annual equivalent worth and
internal rate of return methods approaches;
iii. Build cash flow sequences that reflect the impacts of taxes, interest payments, inflationary
cost, depreciation;
iv. Evaluate rates of return on investments;
v. Evaluate benefit-cost ratios of service sectors;
vi. Grasp the concepts of economic service life and replacement analysis;
vii. Assess alternatives and make capital budget decisions; and
viii. Conduct economic analysis in the service sector

Course Outline: See attachment
Course Format: A participatory approach that is structured within the triad of lectures, discussions,
and case studies shall be adopted. Low participation endears low point as grade points for the final
examination is less than 50 percent of the Cumulative Grade Point, see Assessment Methodology
below. Students will be required to work in a team of three (3) on hypothetic / real projects in order
to put to use techniques learnt. Selected projects / case studies are of necessity within the curricula of
the departments of the college.
Reference Textbooks: Chan, S. P. (2007). Contemporary Engineering Economics. Fourth Edition,

ISBN 0-13-187628-7 Pearson Prentice Hall Upper Saddle River, New Jersey 07458
Donald, G. N., Ted, G. E., and Jerome, P. L. (2012). Engineering Economic Analysis. Eleventh
Edition, ISBN 978-0-19-977804-1 Oxford University Press, North Carolina State University, New
York Oxford.
Software:
A. Microsoft Excel Suite - Financial formulation and computation shall be executed using this
spread-sheet.
B. Google Classroom - This online classroom helps the classes communicate remotely; All
assignments shall be made available / posted on the classroom’s account as stated below:
Class name: GENG 408 - Engineering Economic_Prof SJ
Section: 1
Room: Comp LAB (8:00 – 9:30AM)
Subject: Engineering Economics
Class code: ib2eql
All lesson-related concerns, outside class hours, would only be entertained through the Google
Classroom platform.
Assessment Methodology:
A. Class Attendance = 5 percent
The duration for the course is a total of 45 contact-hours. An absence from a class (1.5
contact-hours) attracts 0.17 percent deduction from the assigned 5 percent. Thusly, an overall
grade of “DR” would be assigned to any student who had exceeded the three (3) excused
absences (total attendance less than 4.49 percent) allowed, irrespective of such a student’s
overall score – kindly see page 19 of the university catalogue. Late arrival into class distracts,
thus, 15 minutes lateness may count as absence.
B. Class Participation / Short Quiz = 10 percent
Asking of probing questions, contribution of personal experiences, responsiveness to asked
oral questions and short impromptu written quizzes throughout the course counts into class
participation.
C. Home Work / Computer Computations of Case studies and Presentation = 25 percent
Five to Six assignments involving the use of MS Excel suite shall be given. Several real /
hypothetic case studies related to technological and engineering activities are expected to be
presented. Case studies shall cover the aspects of mechanical engineering, electrical
engineering, computer science / engineering, and civil engineering. A late submitted

assignment shall attract only a maximum of 50 percent of the allotted points – waivers shall
only be made on the merit of the excuse presented.
D. Mid Term Exam = 20 percent
Purely written, open book.
E. Final Exam = 40 percent
Purely written; closed book; formula sheet must be submitted and approved a week before
slated date to qualify for examination material.
Grading Scale:
Letter Grade Numerical Range
A 90 – 100
B 80 – 89
C 70 – 79
D 60 – 69
F 0 – 59 kindly see page 18 of the university catalogue.
Attendance Policy: Class attendance is strongly recommended and constitutes 5 percent of the
Cumulative Grade Point. Attendance may be used to determine borderline grades.
Policies: You must submit all the assignments even though you may not attend all the lectures. Late
homework will not be accepted after three days it is due. Late assignments and make-up tests
shall be given only if the student can show valid reason as per TU rules. This valid absence normally
has to be established before the regularly scheduled assignment. It is student’s responsibility to make
sure the homework and exam answers are legible. Unrecognizable homework and exam could be
graded as zero.
Course Binder: Students are required to keep all the homework and exams in a binder after they are
returned to them. This collection can be used to check the instructor’s grading records. In case of
errors in recording grades, students will need to supply their original graded paper as verification.
After the homework or graded exams are returned, any changes or modification to the answer will be
considered as cheating if anyone plans to use it as the evidence for a better mark.
Ethics: Submission of homework by proxy is frown at. Students are encouraged to discuss with each
other, but the homework must be original and from each student. Similar / copied homework will be
returned with a score of zero. Exams must be finished independently by each student. The “Group
work” on exams will be considered as cheating. Any cheating behaviour will lead to the “F” grade
for this course and further penalty that complies with the rules and guidelines for the academic
honesty and plagiarism, as specified in the Student Handbook, shall be invoked.
Social Justice: Tubman University is committed to social justice. I expect to nurture and foster a
learning environment based upon open communication, mutual respect, and non-discrimination. Our
University does not discriminate on the basis of race, sex, age, disability, veteran status, religion,
sexual orientation, colour or national origin. Any suggestion as to how to further such positive and
open environment in this class shall be duly appreciated and given serious consideration. If you are a
student with a disability and anticipate needing any type of accommodation in order to participate in
this class, please advise me.

William V. S. Tubman University
COURSE OUTLINE
GENG 408
Engineering Economics
…making rational techno-economic decisions

COURSE OUTLINE
Module One: Engineering Economic Decisions (3 hours)
1.1 Role of Engineers in Business
1.1.1 Types of Business Organization
1.1.2 Engineering Economic Decisions
1.1.3 Personal Economic Decisions
1.2 What Makes the Engineering Economic Decision Difficult?
1.3 Economic Decisions versus Design Decisions
1.4 Large-Scale Engineering Projects
1.4.1 How a Typical Project Idea Evolves
1.4.2 Impact of Engineering Projects on Financial Statements
1.4.3 A Look Back in 2007 - 2010: Did Nokia Make the Right Decision?
1.5 Common Types of Strategic Engineering Economic Decisions
1.6 Fundamental Principles of Engineering Economics
Summary
Module Two: Interest Rate and Economic Equivalence (6 hours)

2.1 Interest: The Cost of Money
2.1.1 The Time Value of Money
2.1.2 Elements of Transactions Involving Interest
2.1.3 Methods of Calculating Interest
2.1.4 Simple Interest versus Compound Interest
2.2 Economic Equivalence
2.2.1 Definition and Simple Calculations
2.2.2 Equivalence Calculations: General Principles
2.3 Development of Interest Formulas
2.3.1 The Five Types of Cash Flows
2.3.2 Single-Cash-Flow Formulas
2.3.3 Uneven Payment Series
2.3.4 Equal Payment Series
2.3.5 Linear Gradient Series
2.3.6 Geometric Gradient Series
2.4 Unconventional Equivalence Calculations
2.4.1 Composite Cash Flows
2.4.2 Determining an Interest Rate to Establish Economic Equivalence
2.5 Nominal and Effective Interest Rates
2.5.1 Nominal Interest Rates
2.5.2 Effective Annual Interest Rates
2.5.3 Effective Interest Rates per Payment Period
2.5.4 Continuous Compounding
2.6 Equivalence Calculations with Effective Interest Rates
2.6.1 When Payment Period Is Equal to Compounding Period
2.6.2 Compounding Occurs at a Different Rate than that at which Payments Are Made
Summary

Module Three: Engineering Costs and Cost Estimating (6 hours)
3.1 Engineering Costs
3.1.1 Fixed, Variable, Marginal, and Average Costs
3.1.2 Sunk Costs
3.1.3 Opportunity Costs
3.1.4 Recurring and Nonrecurring Costs
3.1.5 Incremental Costs
3.1.6 Cash Costs versus Book Costs
3.1.7 Life-Cycle Costs
3.2 Cost Estimating
3.2.1 Types of Estimate
3.2.1 Difficulties in Estimation
3.3 Estimating Models
3.3.1 Per-Unit Model
3.3.2 Segmenting Model
3.3.3 Cost Indexes
3.3.4 Power-Sizing Model
3.3.5 Triangulation
3.3.6 Improvement and the Learning Curve
Summary
Problems
Short Case Studies
Module Four: Present-Worth Analysis (8 hours)

4.1 Describing Project Cash Flows
4.1.1 Loan versus Project Cash Flows
4.1.2 Independent versus Mutually Exclusive Investment Projects
4.2 Initial Project Screening Method
4.2.1 Payback Period: The Time It Takes to Pay Back
4.2.2 Benefits and Flaws of Payback Screening
4.2.3 Discounted Payback Period
4.3 Discounted Cash Flow Analysis
4.3.1 Net-Present-Worth Criterion
4.3.2 Meaning of Net Present Worth
4.3.3 Basis for Selecting the MARR
4.4 Variations of Present-Worth Analysis
4.4.1 Future-Worth Analysis
4.4.2 Capitalized Equivalent Method
4.5 Comparing Mutually Exclusive Alternatives
4.5.1 Meaning of Mutually Exclusive and “Do Nothing”
4.5.2 Analysis Period Equals Project Lives
4.5.3 Analysis Period Differs from Project Lives
4.5.4 Drawing Cash Flow Diagrams with a Spreadsheet (Microsoft Excel)
Summary
Problems

Module Five: Annual Equivalent-Worth Analyses (6 hours)
5.1 Annual Equivalent-Worth Criterion
5.1.1 Fundamental Decision Rule
5.1.2 Annual-Worth Calculation with Repeating Cash Flow Cycles
5.1.3 Comparing Mutually Exclusive Alternatives
5.2 Capital Costs versus Operating Costs
5.3 Applying Annual-Worth Analysis
5.3.1 Benefits of AE Analysis
5.3.2 Unit Profit or Cost Calculation
5.3.3 Make-or-Buy Decision
5.4 Life-Cycle Cost Analysis
5.5 Rate-of-Return Analysis
5.5.1 Return on Investment
5.5.2 Return on Invested Capital
5.6 Methods for Finding the Rate of Return
5.6.1 Simple versus Nonsimple Investments
5.6.2 Predicting Multiple i*’s
5.6.3 Computational Methods
5.7 Internal-Rate-of-Return Criterion
5.7.1 Relationship to PW Analysis
5.7.2 Net-Investment Test: Pure versus Mixed Investments
5.7.3 Decision Rule for Pure Investments
5.7.4 Decision Rule for Mixed Investments
Summary
Problems
Case Studies
Module Six: Replacement Decisions (6 hours)

6.1 Replacement Analysis Fundamentals
6.1.1 Basic Concepts and Terminology
6.1.2 Opportunity Cost Approach to Comparing Defender and Challenger
6.2 Economic Service Life
6.3 Replacement Analysis when the Required Service Is Long
6.3.1 Required Assumptions and Decision Frameworks
6.3.2 Replacement Strategies under the Infinite Planning Horizon
6.3.3 Replacement Strategies under the Finite Planning Horizon
6.3.4 Consideration of Technological Change
6.4 Capital-Budgeting Decisions
6.4.1 Methods of Financing
6.4.2 Equity Financing
6.4.3 Debt Financing
6.4.4 Capital Structure
6.5 Cost of Capital
6.5.1 Cost of Equity
6.5.2 Cost of Debt

6.5.3 Calculating the Cost of Capital
6.5 Capital Budgeting
6.5.1 Evaluation of Multiple Investment Alternatives
6.5.2 Formulation of Mutually Exclusive Alternatives
6.5.3 Capital-Budgeting Decisions with Limited Budgets
Summary
Problems
Case Studies
Module Seven: Economic Analysis in the Service Sector (4 hours)

7.1 What Is the Service Sector?
7.1.1 Characteristics of the Service Sector
7.1.2 How to Price Service
7.3 Economic Analysis in the Public Sector
7.3.1 What Is Benefit–Cost Analysis?
7.3.2 Framework of Benefit–Cost Analysis
7.3.3 Valuation of Benefits and Costs
7.3.4 Quantifying Benefits and Costs
7.3.5 Difficulties Inherent in Public-Project Analysis
7.4 Benefit–Cost Ratios
7.4.1 Definition of Benefit–Cost Ratio
7.4.2 Relationship between B/C Ratio and NPW
7.4.3 Comparing Mutually Exclusive Alternatives: Incremental Analysis
7.5 Analysis of Public Projects Based on Cost-Effectiveness
7.5.1 Cost-Effectiveness Studies in the Public Sector
7.5.2 A Cost-Effectiveness Case Study
Summary
Problems
Short Case Studies


GENG 408 Engineering Economics Course Syllabus PDF

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William V. S.

© 2018. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

Course Code / Title: GENG 408 / Engineering Economics

Course Description: Examines the technical approaches to evaluating engineering economics

© 2019. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

Reference Textbooks: Chan, S. P. (2007). Contemporary Engineering Economics. Fourth Edition,

© 2019. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

© 2019. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

© 2019. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

Module Two: Interest Rate and Economic Equivalence (6 hours)

© 2019. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

Module Four: Present-Worth Analysis (8 hours)

© 2019. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

Module Six: Replacement Decisions (6 hours)

© 2019. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

Module Seven: Economic Analysis in the Service Sector (4 hours)

© 2019. Engr. Sylvester Jemigbeyi, Associate Professor in Mechanical Engineering

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