Difference between revisions of "Engineering economics - 2012"

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| vimeoID5 = 49860671
| vimeoID5 = 49860671
| vimeoID6 = 49931051
| vimeoID6 = 49931051
| vimeoID7 = 50168705
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| vimeoID14 = 51236983
| vimeoID15 = 52485598
| course_notes_PDF =  
| course_notes_PDF =  
| course_notes_alt = Course notes
| course_notes_alt = Course notes
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| video_download_link6_MP4_size = 113 M
| video_download_link6_MP4_size = 113 M
| video_notes6 =
| video_notes6 =
| video_download_link7_MP4 = http://learnche.mcmaster.ca/media/4N4-2012-04A.mp4
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| video_download_link8_MP4_size = 112 M
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| video_notes14 =
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| video_download_link15_MP4_size = 116 M
| video_notes15 =
}}
}}
== Selected references ==
The following printed materials have influenced the course content.  In alphabetical order:
{| class="wikitable sortable"
|-
! Author(s)
! Title
! Library link
! Google search for ISBN
! Amazon link for ISBN
|-
| Blank and Tarquin
| Engineering Economy (7th edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1220113 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780073376301 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780073376301 Amazon]
|-
| Fraser ''et al''.
| Engineering Economics in Canada (3rd edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1147892 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780131269576 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780131269576 Amazon]
|-
| Fraser ''et al''.
| Global Engineering Economics (4th edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1669336 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780132071611 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780132071611 Amazon]
|-
| Park, Zuo and Pelot
| Contemporary Engineering Economics, a Canadian perspective (3rd edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1143393 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780321538765 Google]
| NA
|-
| Peters and Timmerhaus
| Plant Design and Economics for Chemical Engineers
| [http://catalogue.mcmaster.ca/catalogue/Record/1220114 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780072392661 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780072392661 Amazon]
|-
| Stermole and Stermole
| Economic Evaluation and Investment Decision Methods (13th edition, or earlier)
| NA
| [https://www.google.ca/search?q=ISBN%3A9781878740137 Google]
| [https://www.amazon.com/s/ref=nb_sb_noss?url=field-keywords=9781878740137 Amazon]
|-
| Turton ''et al''.
| Analysis, Synthesis and Design of Chemical Processes (4th edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1220113 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780132618120 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780132618120 Amazon]
|-
| Woods, Donald
| [http://learnche.mcmaster.ca/media/mcmaster/Woods--Cost-estimatation-for-the-process-industries.pdf Cost Estimation for the Process Industries] (McMaster download, 30 Mb)
| NA
| NA
| NA
|-
|}
* A spreadsheet of [https://docs.google.com/spreadsheet/pub?key=0AtqiArsxgE8YdEZXMnZBdk5sTHY4OG5aSWZlUHlwcmc&output=html inflation information] specific to the process industries. Print this out for the midterm.
* A [http://www.che.com/Assets/File/CEPCI_2002.pdf reading on the Chemical Engineering Plant Cost Index] (CEPCI)


== Class slides ==
== Class slides ==


The slides are in [[Course_pack_for_2012 | tab 3 of the notes]].
* The slides for class are in [[Course_pack_for_2012 | tab 3 of the notes]].
 
* The [http://learnche.mcmaster.ca/media/mcmaster/4N4-2012-Economics-Visual-Aids.pdf presentation slides (with solutions filled in)] are available now.


=== 11 September 2012 ===
=== 11 September 2012 ===
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* We will wrap up Measures of Profitability (slides 49 to 54); including jumping ahead to slides 88 to 90.
* We will wrap up Measures of Profitability (slides 49 to 54); including jumping ahead to slides 88 to 90.
* If you are looking for some more information regarding NPV vs DCFRR, please [http://sambaker.com/econ/invest/invest.html read this tutorial], or use [https://www.google.ca/#hl=en&q=NPV+vs+irr this Google search] to understand the subtleties.
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-03B.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-03B.mp4 video] recording of the class
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-03B.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-03B.mp4 video] recording of the class


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* We will cover Depreciation, slide 63 to 80.
* We will cover Depreciation, slide 63 to 80.
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-03C.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-03C.mp4 video] recording of the class
* Here are the websites used in today's class if you want more information on CRA's rules on depreciation (called Capital Cost Allowance, CCA):
* Here are the websites used in today's class if you want more information on CRA's rules on depreciation (called Capital Cost Allowance, CCA):
** [http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/cca-dpa/menu-eng.html CCA for individual tax payers]
** [http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/cca-dpa/menu-eng.html CCA for individual tax payers]
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=== 25 September 2012 ===
=== 25 September 2012 ===
* We will cover the effect of taxes on NPV, slides 78 to 83; consider mutually exclusive alternatives, slides 91 to 103.
* We will (re)cover the effect of depreciation and taxes on NPV, slides 78 to 83 and go through the tutorial/assignment 3. We will also discuss the SDL project selection procedure.
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-04A.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-04A.mp4 video] recording of the class
* Please see [[Media:NPV-calculation-depreciation-tax.pdf | this PDF slide 80]] from the course notes. Note the following relationships:
** \( \text{G} = \text{C}+\text{E} \)
** \(\text{H} = \text{A}-\text{B} - \text{G} = \text{Total income} - (\text{Eligible expenses}) - \text{Depreciation}\)
** \(\text{J} = p_\text{tax}  \cdot\text{H} = 0.35 \text{H} \)
** \(\text{L = NCFAT} = \text{A} - \text{B} - \text{J} - \text{K} = \text{A} - (\text{B} + \text{K}) - \text{J} = \text{Total income} - (\text{Total expenses}) - \text{Tax paid}\)
** \(\text{L} \) = this is the line we use for our NPV calculation
** \(\text{M} =  \displaystyle \frac{\text{L}}{\left(1+i_\text{MARR}\right)^n}\)
** <span style="color:#882020">'''Important note'''</span>: I've assumed that expenses are entered as positive numbers. This allows me to write, for example, \( \text{H} = \text{A} - \text{B} - \text{G} = \text{Total income} - (\text{Eligible expenses}) - \text{Depreciation}\). If you use negative signs in front of your dollars, which is what the spreadsheet in the course notes does, then adjust these formulas.


=== 27 September 2012 ===
=== 27 September 2012 ===
* We will cover sensitivity analysis on an NPV, slides 104 to 115
* We will cover sensitivity analysis on an NPV, slides 104 to 115  
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-04B.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-04B.mp4 video] recording of the class
* The [http://dx.doi.org/10.1016/j.fuproc.2011.06.019 publication by Adams and Barton] with NPV for polygeneration.
* An alternative way to visualize sensitivity analysis data shown in class:
[[Image:Alternative-visualization-of-NPV-sensitivity-analysis.png | 400px ]]
 
=== 28 September 2012 ===
 
* We will cover slides on capital cost estimation, starting at slide 116.
* A [http://accessengineeringlibrary.com/maps/engineering-economics link to the engineering economics] sections in Perry's handbook
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-04C.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-04C.mp4 video] recording of the class
 
=== 02 October 2012 ===
* Capital cost estimation review, focusing on the what the bare module (BM) cost is; slides 128 to 137
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-05A.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-05A.mp4 video] recording of the class
 
=== 04 October 2012 ===
 
* Continuing with capital cost estimation and some examples; slides 138 to 150
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-05B.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-05B.mp4 video] recording of the class
 
=== 05 October 2012 ===
 
* Continuing with capital cost estimation and some examples; slides 151 to 158
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-05C.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-05C.mp4 video] recording of the class
 
=== 09 October 2012 ===


== Selected references ==
* Continuing with capital cost estimation and manufacturing cost estimation; slides 159 onwards
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-06A.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-06A.mp4 video] recording of the class
 
=== 11 October 2012 ===
 
* We wrap up the engineering economics section and review some final examples.
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-06B.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-06B.mp4 video] recording of the class
 
=== 30 October 2012 ===


The following printed materials have influenced the course content.  In alphabetical order:
* Review of the [[Written_midterm_-_2012 | economics midterm]] solutions
{| class="wikitable sortable"
* [http://learnche.mcmaster.ca/media/4N4-2012-Class-09A.mp3 Audio] and [http://learnche.mcmaster.ca/media/4N4-2012-09A.mp4 video] recording of the class
|-
! Author(s)
! Title
! Library link
! Google search for ISBN
! Amazon link for ISBN
|-
| Blank and Tarquin
| Engineering Economy (7th edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1220113 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780073376301 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780073376301 Amazon]
|-
| Fraser ''et al''.
| Engineering Economics in Canada (3rd edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1147892 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780131269576 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780131269576 Amazon]
|-
| Fraser ''et al''.
| Global Engineering Economics (4th edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1669336 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780132071611 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780132071611 Amazon]
|-
| Park, Zuo and Pelot
| Contemporary Engineering Economics, a Canadian perspective (3rd edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1143393 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780321538765 Google]
| NA
|-
| Stermole and Stermole
| Economic Evaluation and Investment Decision Methods (13th edition, or earlier)
| NA
| [https://www.google.ca/search?q=ISBN%3A9781878740137 Google]
| [https://www.amazon.com/s/ref=nb_sb_noss?url=field-keywords=9781878740137 Amazon]
|-
| Turton ''et al''.
| Analysis, Synthesis and Design of Chemical Processes (4th edition, or earlier)
| [http://catalogue.mcmaster.ca/catalogue/Record/1220113 McMaster]
| [https://www.google.ca/search?q=ISBN%3A9780132618120 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780132618120 Amazon]
|-
|}

Latest revision as of 19:34, 30 October 2012

Class date(s): 11 September onwards
Download video: Link [113 M]
Download video: Link [109 M]
Download video: Link [122 M]
Download video: Link [110 M]
Download video: Link [118 M]
Download video: Link [113 M]
Download video: Link [111 M]
Download video: Link [112 M]
Download video: Link [119 M]
Download video: Link [99 M]
Download video: Link [110 M]
Download video: Link [114 M]
Download video: Link [116 M]
Download video: Link [114 M]
Download video: Link [116 M]

Selected references

The following printed materials have influenced the course content. In alphabetical order:

Author(s) Title Library link Google search for ISBN Amazon link for ISBN
Blank and Tarquin Engineering Economy (7th edition, or earlier) McMaster Google Amazon
Fraser et al. Engineering Economics in Canada (3rd edition, or earlier) McMaster Google Amazon
Fraser et al. Global Engineering Economics (4th edition, or earlier) McMaster Google Amazon
Park, Zuo and Pelot Contemporary Engineering Economics, a Canadian perspective (3rd edition, or earlier) McMaster Google NA
Peters and Timmerhaus Plant Design and Economics for Chemical Engineers McMaster Google Amazon
Stermole and Stermole Economic Evaluation and Investment Decision Methods (13th edition, or earlier) NA Google Amazon
Turton et al. Analysis, Synthesis and Design of Chemical Processes (4th edition, or earlier) McMaster Google Amazon
Woods, Donald Cost Estimation for the Process Industries (McMaster download, 30 Mb) NA NA NA

Class slides

11 September 2012

In this class we give an overview of the "Engineering Economics" section of the course. We start by introducing the topic of the time-value of money.

13 September 2012

We continue considering the time value of money (TVM) and do some class exercises.

  • Slides: We cover slides 24 to 29. Slides 30 and 31 will feature in the next tutorial.
  • Audio and video recording of the class

14 September 2012

  • We wrap up the TVM section with one more example and then continue looking at Measures of Profitability: slides 32 to 42
  • Audio and video (bad sound!)

18 September 2012

  • We continue with various Measures of Profitability: slides 42 to 48
  • Audio and video recording of the class

20 September 2012

  • We will wrap up Measures of Profitability (slides 49 to 54); including jumping ahead to slides 88 to 90.
  • If you are looking for some more information regarding NPV vs DCFRR, please read this tutorial, or use this Google search to understand the subtleties.
  • Audio and video recording of the class

21 September 2012

25 September 2012

  • We will (re)cover the effect of depreciation and taxes on NPV, slides 78 to 83 and go through the tutorial/assignment 3. We will also discuss the SDL project selection procedure.
  • Audio and video recording of the class
  • Please see this PDF slide 80 from the course notes. Note the following relationships:
    • \( \text{G} = \text{C}+\text{E} \)
    • \(\text{H} = \text{A}-\text{B} - \text{G} = \text{Total income} - (\text{Eligible expenses}) - \text{Depreciation}\)
    • \(\text{J} = p_\text{tax} \cdot\text{H} = 0.35 \text{H} \)
    • \(\text{L = NCFAT} = \text{A} - \text{B} - \text{J} - \text{K} = \text{A} - (\text{B} + \text{K}) - \text{J} = \text{Total income} - (\text{Total expenses}) - \text{Tax paid}\)
    • \(\text{L} \) = this is the line we use for our NPV calculation
    • \(\text{M} = \displaystyle \frac{\text{L}}{\left(1+i_\text{MARR}\right)^n}\)
    • Important note: I've assumed that expenses are entered as positive numbers. This allows me to write, for example, \( \text{H} = \text{A} - \text{B} - \text{G} = \text{Total income} - (\text{Eligible expenses}) - \text{Depreciation}\). If you use negative signs in front of your dollars, which is what the spreadsheet in the course notes does, then adjust these formulas.

27 September 2012

  • We will cover sensitivity analysis on an NPV, slides 104 to 115
  • Audio and video recording of the class
  • The publication by Adams and Barton with NPV for polygeneration.
  • An alternative way to visualize sensitivity analysis data shown in class:

Alternative-visualization-of-NPV-sensitivity-analysis.png

28 September 2012

02 October 2012

  • Capital cost estimation review, focusing on the what the bare module (BM) cost is; slides 128 to 137
  • Audio and video recording of the class

04 October 2012

  • Continuing with capital cost estimation and some examples; slides 138 to 150
  • Audio and video recording of the class

05 October 2012

  • Continuing with capital cost estimation and some examples; slides 151 to 158
  • Audio and video recording of the class

09 October 2012

  • Continuing with capital cost estimation and manufacturing cost estimation; slides 159 onwards
  • Audio and video recording of the class

11 October 2012

  • We wrap up the engineering economics section and review some final examples.
  • Audio and video recording of the class

30 October 2012

Retrieved from "https://learnche.org/wiki_4N4/index.php?title=Engineering_economics_-_2012&oldid=470"