CH E 314

Engineering Economy

Fall 2003

Catalog Description (2003-2004): Fundamentals of engineering economy. Cost concepts. Time value of money and equivalence. Economic analysis of alternatives. Replacement analysis. Depreciation and after-tax analysis. Effects of inflation on economic analysis.

Student Outcomes: At the end of this course, each student should be able to:

1. Explain and apply the concept of the time value of money.
2. Apply interest equations to equivalence calculations.
3. Conduct economic analysis of alternatives.
4. Demonstrate a basic understanding of depreciation and an ability to estimate corporate taxes for typical engineering projects.
5. Develop project cash flows for design alternatives including tax implications.
6. Make replacement decisions.
7. Use sensitivity and break-even analyses.
8. Demonstrate an understanding of inflation and its impact on engineering decision-making.

• Instructor
• Textbook
• Course Policies
  1. Collaboration
  2. Exams
     • Exam Tips
  3. Grading
  4. Homework
  5. Late Assignments
  6. Extra Credit
• Schedule
• Assignment List
• Lecture Notes
• Current Grade Information & Class Standing
• Related Web Links

Instructor

I can usually be found in or around my office from about 7:30 in the morning until about 4:00 in the afternoon. Please feel free to stop by the office as needed, even if it doesn't match the posted office hours.

You are welcome to phone or email to arrange an appointment. Appointments are not necessary, but are nice if you think you need a sizeable block of time.

My general schedule for this semester may be found by following this link.

Textbook

The text for this class will be:

• Park, C.S., Contemporary Engineering Economics, 3rd ed., Prentice Hall, 2002

I may also place reference material chosen to supplement the text on reserve at the library.

The library has a tremendous amount of material that is relevant to this course. Use it to your advantage.

Notes on the Text

If you find a misprint, etc., in the text, please let me know so that the information can be shared. Thus far, I know of:

• Table 4.3 on p. 151 has incorrect Excel commands in the first row.
• Problem 4.11 on p. 169 refers to Example 4.8; it should point to Example 4.10

Class Policies

Collaboration

Generally speaking, students are encouraged to work together to understand the course material. Students are allowed to cooperate on all "regular" homework problems, unless specifically requested not to do so. All students must turn in individual assignments. Penalties will be imposed if there is evidence that students did not individually prepare their work. Some "design" homework assignments will be assigned to small groups. In these cases, please do not collaborate outside your group.

Collaboration is not permitted on any exam.

Exams

Current plans (subject to change -- your opinions are invited) are to have four quizzes during the semester. I will attempt to space them roughly equally, and will endeavor to give you at least one week's firm advance notice of each. A quiz will typically be worth 50 points.

All regular exams will be open-book, open-note. The final examination will be open-book only -- notes and other unpublished materials will not be permitted.

No make-up exams will be given without advance arrangements (made before the day of the exam).

Collaboration is not permitted on any exam.

My goal for an exam problem is for the student to prove they know how to apply their knowledge to an unfamiliar situation. By contrast, homework is intended to exercise more basic skills. This means that test problems will not be "like the homework". Be warned.

Exam Tips

If you are really interested in maximizing your exam score, keep in mind that if I don't understand what you're doing, you probably won't get all the points you may have earned. Also remember that I'm usually matching your paper against a solution of my own, so you want the similarities to jump out at me while any differences hide under a bushel.

With this in mind, be sure to

• ALWAYS provide a key to the symbols you are using. A drawing of the system with all the variables labeled is a good way to do this. Just because you are using symbols familiar from class, don't assume I'll know what you're doing. If you have set things up even slightly differently, it could cause problems when I match your work to the key.
• Mark your answers so that I can find them and know that you meant them to be an answer. You may have found the right number, but you need to make sure that I know that you know that it is the number you were supposed to get. Drawing a box around final answers is one good way to mark an answer.
• Answer all the questions. If I wrote it down, it is worth points. Even if you can't get the final mathematical answer, when there are "discussion" questions asked, be sure and try to put something down. Sometimes, just making that effort can lead to a few points.
• Follow the directions. If I specifically ask for something like a cover sheet, be sure and include it. I've no qualms about penalizing you a few points for failure to follow (even rinky-dink) instructions.
• Don't worry about treating me like the village idiot -- take my hand and lead me through your calculation. If you're bringing a number forward from a previous calculation or page, it can't hurt to label it ("flow rate from previous page", "temperature from energy balance", etc.). Try to keep things organized. When it comes to partial credit, I get stingy when I get confused.
• Support your answers. Most of the time, when you're asked a question as part of a problem, you need to show some calculation or numbers to justify your response. I usually try to use the words "describe" or "qualitative" when all I expect is words.

Grading

Grades will be determined by student performance on graded homework asssignments, examinations, and a comprehensive final examination. The components of the grade will be weighted so that:

• Quizzes and "Design Problems" (55%)
• Final (30%)
• Homework (15%)

The target grading curve will be determined by a 90, 75, 60, 50 scale. The grades actually assigned may be adjusted downward to reflect overall class performance (the class average score), using natural breaks in the score distribution. The class average score will typically correspond to a "C" grade. Adjustments will never raise a cutoff.

This grading scale does not apply to those students who fail to achieve at least 35% on the final exam. In such cases, an appropriate grade will be determined without strict reliance on the scale.

All students should be aware that performance on the final is very important, and that qualitative weight is given to work at the end of the semester over that at the beginning.

Homework

The best way to acquire the skills this course seeks to teach is practice. Homework assignments are the best opportunity to do so. Students are encouraged to work as many homework problems as they can in order to improve their knowledge.

Homework will be assigned frequently. Most problems will be worth about 10 points apiece. I will try to give you advance warning of the problems I am considering for assignment.

Homework is due by the beginning of class on the designated due date unless other instructions are given at the time of the assignment. Waiting too long to start is never an acceptable reason for being late. Late homework is not accepted unless arrangements are made in advance of the deadline.

All homework assignments must meet the following requirements. Assignments which do not comply will not be graded.

• Paper -- must be U.S. standard letter size (8-1/2 x 11 inches). White, legal yellow, or engineering green are only acceptable colors. Paper must have smooth edges. Sheets with the "spiral notebook fringe" are not acceptable.
• Ink -- work may be done in pencil or ink. Blue and black are the only acceptable colors for calculations, although other colors can be used as highlights or to clarify points in figures.
• Presentation -- Only one side of each sheet should be used. Multiple pages should be stapled whenever feasible.
• Legibility and organization -- All assignments must be legible (to my bad and finicky eyes) and clearly organized. If I cannot follow your calculation sequence, I reserve the right to reject your submission.

Late Assignments

NOTHING will be accepted late unless arrangements were made prior to the due date. If a student is to be out of town, the instructor must be notified in advance. In case of illness, the instructor should be notified before the assignment becomes late, either by phone (901)321-3412 or email.

Makeup exams will only be given under extraordinary circumstances, and only if arrangements are made before the exam period.

Extra Credit

There are two ways to earn "extra credit" or "bonus" points. These are added to your point totals but don't add to the "possible" points. Your options are:

1. Design Your Own Test Problems for credit applicable to your test total. A maximum of three problems may be submitted with deadlines falling on the class period closest to or following October 1, November 1, and December 1.
2. Participate in recognized professional development activities (plant trips, non-required technical lectures, etc.) for credit applicable to your final exam total. I plan to award 2 pts. for the first two acceptable (approved in advance) events and one point thereafter. I also reserve the right to limit the total points awarded to any individual. Most "technical" events sponsored by AIChE are automatically acceptable, provided they are not "required" by some other course. Events sponsored by other engineering groups usually count, but should be cleared in advance if you want the credit.

Lecture Notes

Related Links

The textbook has a companion website.

These are other links that you might find helpful as you study for this class. If you find any of them particularly useful (or especially useless), or if you want to suggest an addition to the list, please email and let me know.

Last Revised: 9 September 2003 by RMP
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