IND 2700 - Engineering Economics

3 lecture hours 0 lab hours 3 credits

Course Description
This course is intended to provide the fundamental techniques for the monetary quantification of engineering and business decisions over time, particularly under uncertainty. Monetary systems and accounting approaches are presented in the context of their application to engineering work. Financial analysis techniques are developed along with their applicability to various types of products. The effects of interest rates, inflation rates, and tax rates are applied to optimal business decision-making. (prereq: MTH 1110) (quarter system prereq: MA 137)

Course Learning Outcomes
Upon successful completion of this course, the student will be able to:

Comprehend the basis of trade and money in a business context
Contrast the effects of changing supply and demand on prices and costs
Understand the roles of profit, cash, and cost in decision-making related to engineering projects
Apply a debit and credit based financial accounting system to basic business transactions
Represent complex, multi-payment transactions graphically using cash-flow diagrams
Calculate the changing value of money over time
Evaluate the worth of the costs and incomes of projects and investments
Apply discounted cash-flow analysis to evaluate proposed capital investments
Use basic calculus to solve economic allocation optimization problems
Determine the effect of changing interest, inflation rates, and project risk on business decisions
Allocate overhead in manufacturing, service, and other engineering-oriented projects
Relate the specific roles that depreciation, inventory valuation, and time offsetting play in engineering related business operations
Recognize the ethical and legal issues related to financial analysis

Prerequisites by Topic

Limits and series

Course Topics

Micro-economic theory of supply and demand
Financial terminology and monetary systems
Accounting systems used in engineering work
Inflationary and deflationary environments
Interest rates and discount rates for monetary return
Present value and future value within the time value of money
Nominal and effective interest rates
Arithmetic annuities
Geometric annuities
Mortgages and other debt structures
Annual worth and permanent worth
Benefit/cost calculations
Breakeven analysis
Economic decision making and optimization
Sensitivity analysis
Reverse annuities
Depreciation and depletion methods
Tax systems and their effect on engineering decision-making
After-tax cash-flow analysis

Coordinator
Dr. Aaron Armstrong

Announcement

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Milwaukee School of Engineering

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IND 2700 - Engineering Economics