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MS-291: Engineering Economics

(3 Credit Hours)

Syllabus & Study Plan

Week Contents Reading Materials
Week 1 Foundation of Engineering Economy, Chapter 1: (B&T 2012)
to various cost concepts
Week 4 Factors: How time and Interest Affect Money Chapter 2: (B&T 2012)

Nominal and Effective Interest Rates Chapter 3: (B&T 2012)

Week Contents Reading Materials

Week 5 Present Worth Analysis, Annual Worth Chapter 5 & Chapter 6:
to Analysis (B&T 2012)
Week 8 Rate of Return Analysis: Single Alternative Chapter 7 & Chapter 8:
and Multiple Alternatives (B&T 2012)

Benefit/Cost Analysis and Public Sector Chapter 9: (B&T 2012)

Economics

Week 9 Mid-Term

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Syllabus & Study Plan (II)

Week Contents Reading Materials
Environmental Impact Assessment Reading Material will be
provided

Week 10 Project Financing and Noneconomic Chapter 10: (B&T 2012)

to Attributes
Week 14 Independent Projects with Budget Chapter 12: (B&T 2012)
Limitations
Breakeven and Payback Analysis Chapter 13: (B&T 2012)

Week Contents Reading Materials

Week 14 Effects of Inflation Chapter 14: (B&T 2012)
to Depreciation Measures Chapter 16: (B&T 2012)
Week 15

Week 16 Final Term

Recommended Books

Reference book for Economics

Major Course Book
Or any other book with title
Economics and is for
undergraduate level

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Grading Policy
Grading Policy
Class participation: 5%
Assignments: 5% (3 in total with 1+1+3 marks)
Quizzes: 15% (including announced+ SQ)
Mid-term Exam: 35%
Final Exam: 40%
Attendance: 100 % (80 min.) to qualify to sit
in the final examination
Please note down that final term will consist of complete
course covered rather than course covered after mid-term

Consulting Hours
• I am 24/7 sort of available person
• But Due to having additional administrative
responsibility sometime it may be difficult
for you to get me on spot
• Before visiting me, make sure I am in
office
• My email is: sabir.m@giki.edu.pk
• Ms. Sabahat email: sabahat@gik.edu.pk

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Chapter 1
Foundations Of
Engineering Economy

MS291: Engineering Economics

Lecture 1

Course Instructor: Dr. Muhammad Sabir

Contents of the Chapter

 What is Economics?
 Why Economics for Engineers ?
 What is Engineering Economy/Economics ?
 How to Performing Engineering Economy Study ?
 Some Basic Concepts
– Various cost concepts
– Time value of money (TVM)
– Interest rate and Rate of Returns
– Cash Flow
– Economic Equivalence
– Simple and compound interest rates
– Minimum Attractive Rate of Return

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Setting the Scene

 Lets start with a simple question ? What is
Economics ? Anyone ?

 There are variety of definitions of Economics but let

me place the most relevant one for this course

 A social science that studies how individuals, firms,

governments and nations make choices on
allocating scarce resources to satisfy their
unlimited wants

Why Engineer Need to know about

Economics ?
 Individuals, Engineers, Managers all made choice
among various alternatives in their every day life
..Any Example ?

 Mostly these choice is associate with money (more

specifically capital or capital funds) but money (or
resources) is limited

 The selection of any choice depends on the

expected future return of each alternative

 Engineers plays a vital role in “such decision” due

to their ability and experience to design, analyze
and synthesize

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Thank You