CHE374H1 F Economic Analysis and Decision Making Engineering Science Course Outline Fall 2011

Instructors
Y.A. Lawryshyn, WB256, yuri.lawryshyn@utoronto.ca C.J. Naus, carl.naus@utoronto.ca

Teaching Assistants
Leili Javanmardi, l.javanmardi@utoronto.ca Patrick Young, pat.young@utoronto.ca

Course Description
Economic evaluation and justification of engineering projects and investment proposals. Cost estimation; financial and cost accounting; depreciation; inflation; equity, bond and loan financing; after tax cash flow; measures of economic merit in the private and public sectors; sensitivity and risk analysis; single and multi-attribute decisions. Introduction to micro-economic. Applications: retirement and replacement analysis; make-buy and buy-lease decisions; economic life of assets; capital budgeting; selection from alternative engineering proposals; production planning; investment selection.

Lectures
Wednesday 6:10 PM 9:00 PM, WB116

Tutorials
Wednesday 1:10 PM-2:00 PM, GB201 and SF3201

Midterm
November 2, 2011, 6:10PM-8:00PM.

Mark Distribution
Starter Assignment Quizzes (during tutorial, best 3 out of 4 x 4 marks each) Problem Sets (group work, 10 x 0.5 mark)* Project (group work) Midterm Exam Final Exam Total * Failure to hand in one problem set will lead to a mark of 0 out of 5. 5 12 5 13 20 45 100

Text
Niall M. Fraser, Elizabeth M. Jewkes, Irwin Bernhardt and May Tajima, Global Engineering Economics: Financial Decision Making for Engineers, Prentice Hall Canada, Fourth Edition, 2009, ISBN 978-0-13-207161-1. Charles Wheelan, Naked Economics: Undressing the Dismal Science, Norton, 2010, ISBN10:0393337642, ISBN - 13:9780393337648. (see discussion on quizzes) Page 1 of 3

Group Work
Students will be required to form groups of 4 persons and to register their group with the TA during the first tutorial. The starter assignment and project are group efforts. Also, it is recommended that the groups work together to solve the problems sets.

Course Outline
The following table outlines the topics to be covered in the course. Item 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Topic Engineering Decision Making Time Value of Money Cash Flow Equivalence Cash Flow and Risk Arbitrage Cash Flow Analysis Comparison Methods Depreciation Financial Accounting Taxation Inflation Replacement Decisions Dealing with Uncertainty and Sensitivity Analysis Dealing with Risk Qualitative Considerations and Multiple Criteria Relevant Sections in Text1 Chapter 1 Chapter 2 Chapter 2 Lecture Notes Chapter 3 Chapters 4-5 Chapter 6 Lecture Notes Chapter 8 Chapter 9 Chapter 7 Chapter 11 Chapter 12 Chapter 13

Tutorials
Tutorials will be held every week. Approximately every second week there will be a quiz. During the other tutorials, TAs will be available for general help. Individuals that receive a mark below 70% on the most recently written quiz will be required to attend the next following tutorial to discuss the solution. Individuals that fail to attend will receive a score of 0 for that quiz. Tutorial Schedule:
Week 1 2 3 4 5 6 7 8 9 10 11 12 13 Date 14-Sep-11 21-Sep-11 28-Sep-11 5-Oct-11 12-Oct-11 19-Oct-11 26-Oct-11 2-Nov-11 9-Nov-11 16-Nov-11 23-Nov-11 30-Nov-11 7-Dec-11 Topic Hand out of starter Starter due, Quiz 1 Quiz 2 Midterm (6-8 pm) Quiz 3 Project due, Quiz 4 Review PS7 PS8 PS9 PS10 Problem Set Due PS1 PS2 PS3 PS4 PS5 PS6

Some topics are not covered in the text and the student is expected to refer to class notes.

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Problem Sets
Problem sets will be posted on Thursdays and will be due the next week. Problems sets are to be submitted at the end of the next tutorial, one problem set per group. Each student should retain a copy of their groups solutions for reference. Late submission of a problem set (as a group) will lead to a 0/5 (i.e. the members of the group will be assigned a mark of 0 for all problems sets).

Projects
The starter assignment and one project will be required to be completed by each group. The project should consist of a report, no longer than 5 pages plus appendices. All files will need to be submitted by email to che374@ecf.utoronto.ca according to the following schedule: Starter Assignment: 10:00 am, October, 5, 2011 Project: 10:00 am, November 30, 2011.

Aids Allowed During Quizzes, Midterm and Exam

The following aids are permitted during quizzes, midterms and exams: one 8 x 11 aid sheet, textbook, any programmable or non-programmable calculator (no pocket computers).

Late Projects, Missed Midterm or Quizzes

Late submission of the project or graded assignments will result in a grade of zero. A student who misses the midterm for legitimate reasons (illness, family hardship) supported with appropriate documentation (see Academic Calendar for details) will have the missed marks added to the final exam (resulting in a final exam weighting equal to 45% plus the missed marks). Missing the midterm for any other reason will result in a grade assignment of zero. Quizzes will be counted best of 3 out of 4. Missing one quiz results in a mark being assessed based on the other 3 quiz marks. If two or more quizzes are missed for legitimate reasons (as discussed), the remainder of the quizzes will be scaled appropriately for a total quiz mark evaluation of 12. Each quiz will have a bonus mark question that will be based on specific chapters of the book Naked Economics, according to the following schedule: Quiz # 1 2 3 4 Chapters 1-3 4-6 7-9 10-13

As discussed above, all individuals must attend the tutorial following the quiz if they receive a mark below 70%. Failure to attend the tutorial will lead to a mark of 0/4 for that quiz.

Email Correspondence
For privacy purposes, please send emails directly from your utoronto.ca account. Please avoid the use of other email providers.

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