Difference between revisions of "Engineering economics - 2014"

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| [https://www.google.ca/search?q=ISBN%3A9780072392661 Google]
| [https://www.google.ca/search?q=ISBN%3A9780072392661 Google]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780072392661 Amazon]
| [https://www.amazon.ca/s/ref=nb_sb_noss?url=field-keywords=9780072392661 Amazon]
|-
| Seider, Seader, Lewin and Widagdo
| Product and Process Design Principles: Synthesis, Analysis and Design, 3rd Edition
| NA
| [https://www.google.ca/search?q=ISBN%3A9780470048955 Google]
| [https://www.amazon.com/s/ref=nb_sb_noss?url=field-keywords=9780470048955 Amazon]
|-
|-
| Stermole and Stermole  
| Stermole and Stermole  
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|-
|-
| Woods, Donald
| 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)
| [http://learnche.mcmaster.ca/media/mcmaster/Woods--Cost-estimatation-for-the-process-industries.pdf Cost Estimation for the Process Industries] (McMaster students only; use MacSecure on campus to download the PDF, 30 Mb)
| NA
| NA
| NA
| NA
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|-
|}
|}
<!--
* A spreadsheet of [https://docs.google.com/spreadsheet/pub?key=0AtqiArsxgE8YdEZXMnZBdk5sTHY4OG5aSWZlUHlwcmc&output=html capital cost 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) -->




= Readings and resources =
* The slides from the 2013 class are available for those that want to read ahead. I'm modifying the slides somewhat from last year, but feel free to go through the 2013 ones if you want.


== Class slides, videos, and other resources ==
= Class slides, videos, and other resources =


{| class="wikitable"  style="text-align: center;"
{| class="wikitable"  style="text-align: center;"
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| align="left"|
| align="left"|
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.  
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.  
| [[Media:Economics-4N04-2013-Part-1.pdf |Slides]]
| [[Media:Economics-4N04-2014-Part-1.pdf |Slides]]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-02A.mp4 Video]  
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-02A.mp4 Video]  
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-02A.mp3 Audio]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-02A.mp3 Audio]
|  align="left"|
|  align="left"|
* All the [https://docs.google.com/spreadsheet/ccc?key=0AtqiArsxgE8YdEljM1RnQ20tSDRlLURDLVo2ZjBXR1E#gid=1 spreadsheet examples used in class] are available.
* All the [https://docs.google.com/spreadsheet/ccc?key=0AtqiArsxgE8YdEljM1RnQ20tSDRlLURDLVo2ZjBXR1E#gid=1 spreadsheet examples used in this section of the course] are available.
|-
|-
| 10 September
| 10 September
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| align="left"|
| align="left"|
We looked at the investing point of view last class; in this class we look at the inflationary viewpoint and why money in the future is worth less in today's terms.
We looked at the investing point of view last class; in this class we look at the inflationary viewpoint and why money in the future is worth less in today's terms.
| [[Media:Economics-4N04-2013-Part-1.pdf |Slides]]
| [[Media:Economics-4N04-2014-Part-1.pdf |Slides]]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-02B.mp4 Video]  
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-02B.mp4 Video]  
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-02B.mp3 Audio]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-02B.mp3 Audio]
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| align="left"|
| align="left"|
We looked at an example the considered the time value of money; then discussed various criteria related to assessing an investment. Our focus in the next class is more detail around these "profitability metrics"
We looked at an example the considered the time value of money; then discussed various criteria related to assessing an investment. Our focus in the next class is more detail around these "profitability metrics"
| [[Media:Economics-4N04-2013-Part-1.pdf |Slides]]
| [[Media:Economics-4N04-2014-Part-1.pdf |Slides]]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-02C.mp4 Video]  
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-02C.mp4 Video]  
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-02C.mp3 Audio]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-02C.mp3 Audio]
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| align="left"|
| align="left"|
We looked at what NPV means and how you can explain it to someone else. Details around payback time, and the minimum acceptable rate of return (MARR) were discussed.
We looked at what NPV means and how you can explain it to someone else. Details around payback time, and the minimum acceptable rate of return (MARR) were discussed.
| [[Media:Economics-4N04-2013-Part-1.pdf |Slides]]
| [[Media:Economics-4N04-2014-Part-1.pdf |Slides]]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-03A.mp4 Video]  
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-03A.mp4 Video]  
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-03A.mp3 Audio]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-03A.mp3 Audio]
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| 03B
| 03B
| align="left"|
| align="left"|
We saw how the MARR is used to compare an investment, and that DCFRR > MARR for a worthwhile investment. We considered how to select among independent alternative investments.
We saw how the MARR is used to compare an investment, and that DCFRR exceeds MARR for a worthwhile investment. We considered how to select among independent alternative investments.
| [[Media:Economics-4N04-2013-Part-1.pdf |Slides]]
| [[Media:Economics-4N04-2014-Part-1.pdf |Slides]]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-03B.mp4 Video]  
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-03B.mp4 Video]  
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-03B.mp3 Audio]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-03B.mp3 Audio]
|  align="left"|
|  align="left"|
* Companies raise money by issuing stocks, but after [http://en.wikipedia.org/wiki/Initial_public_offering their IPO], the stocks are bought and sold outside the company. Read this article to [http://www.investopedia.com/articles/basics/03/020703.asp understand though why companies care about their stock prices].
|-
|-
| 19 September
| 19 September
| 03C
| 03C
| align="left"|
| align="left"|
We are going to consider the effect of taxes and depreciation on cash flows.
We started to consider the effect of depreciation on cash flows.
| colspan="3"|
| [[Media:Economics-4N04-2014-Part-2.pdf |Slides]]  
[[Media:Economics-4N04-2013-Part-2.pdf |Slides]] &#8592; these are new
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-03C.mp4 Video]  
<!--| [http://learnche.mcmaster.ca/media/2014-4N4-Class-03B.mp4 Video] -->
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-03C.mp3 Audio]
<!-- | [http://learnche.mcmaster.ca/media/2014-4N4-Class-03B.mp3 Audio] -->
|  align="left"|
|  align="left"|
* Investigate the various [http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/dprcbl-eng.html classes of CCA] on the CRA website.
|-
|-
| 22 September
| 04A
| align="left"|
We see how tax and depreciation combine to affect cash flows and TVM.
| [[Media:Economics-4N04-2014-Part-2.pdf |Slides]]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-04A.mp4 Video]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-04A.mp3 Audio]
|  align="left"|
* The [[Media:Cash-flow-calculation.pdf|cashflow handout]] that was supplied in class (for you to practice with)
* See the [https://docs.google.com/spreadsheet/ccc?key=0AtqiArsxgE8YdEljM1RnQ20tSDRlLURDLVo2ZjBXR1E#gid=6 spreadsheet with all calculations] from today's class.
|-
| 24 September
| 04B
| align="left"|
We will quickly wrap up the prior case study, and the consider the estimation of capital costs.
| [[Media:Economics-4N04-2014-Part-3.pdf |Slides]]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-04B.mp4 Video]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-04B.mp3 Audio]
|  align="left"|
|-
| 26 September
| 04C
| align="left"|
Tyler will be teaching the class today around sales and (non-capital) cost estimation. I will be away from campus.
| colspan="2" |
[[Media:Economics-4N04-2014-Part-3.pdf |Slides]]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-04C.mp3 Audio]
|  align="left"|
Video recording of this class is ''not possible''.
|-
| 29 September
| 05A
| align="left"|
We covered the start of capital cost estimation: looking at capacity factors and inflation factors
|
[[Media:Economics-4N04-2014-Part-3.pdf |Slides]]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-05A.mp4 Video]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-05A.mp3 Audio]
|  align="left"|
* A spreadsheet of [https://docs.google.com/spreadsheet/pub?key=0AtqiArsxgE8YdEZXMnZBdk5sTHY4OG5aSWZlUHlwcmc&output=html capital cost 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)
|-
| 01 October
| 05B
| align="left"|
We started looking at how to use the cost correlations from tables, and adjust them for capacity, materials, operations and inflation.
|
[[Media:Economics-4N04-2014-Part-3.pdf |Slides]]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-05B.mp4 Video]
|  [http://learnche.mcmaster.ca/media/2014-4N4-Class-05B.mp3 Audio]
|  align="left"|
|-
| 03 October
| 05C
| align="left"|
We continued and finished the capital costing section.
|
[[Media:Economics-4N04-2014-Part-3.pdf |Slides]]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-05C.mp4 Video]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-05C.mp3 Audio]
|  align="left"|
|-
| 06 October
| 06A
| align="left"|
We will start (and finish) the final short section of the economics topic: sensitivity analysis
| colspan="1"|
[[Media:Economics-4N04-2014-Part-4.pdf |Slides]]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-06Amp4 Video]
| [http://learnche.mcmaster.ca/media/2014-4N4-Class-06A.mp3 Audio]
|  align="left"|
|}
|}


<!--
Some [[Media:Economics-4N04-Extra-problems-Marlin.pdf |extra slides on economic problems]] were donated by Dr. Marlin. They are for you to complete in your own time. They are good practice for the midterm.
* Some [[Media:Economics-4N04-2013-06A.pdf |extra slides on economic problems]] were donated by Dr. Marlin. They are for you to complete in your own time.
-->

Latest revision as of 19:00, 27 October 2014

Class date(s): 08 September 2014 onwards
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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
Seider, Seader, Lewin and Widagdo Product and Process Design Principles: Synthesis, Analysis and Design, 3rd Edition NA 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 students only; use MacSecure on campus to download the PDF, 30 Mb) NA NA NA


Class slides, videos, and other resources

Date Class number Topic Slides for class Video and audio files References and Notes
08 September 02A

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.

Slides Video Audio
10 September 02B

We looked at the investing point of view last class; in this class we look at the inflationary viewpoint and why money in the future is worth less in today's terms.

Slides Video Audio
12 September 02C

We looked at an example the considered the time value of money; then discussed various criteria related to assessing an investment. Our focus in the next class is more detail around these "profitability metrics"

Slides Video Audio

We will be covering not only engineering economics in 4N, but also a bit of "personal economics".

  • Take a look at this article. As engineers, you will have to decide on finances for the company are you working for, which is no different to making financial decisions for your own life.
  • And then another article about the rising cost of tuition that is coming along: "Stock up on ramen noodles: cost of university to rise 13 per cent over four years"
15 September 03A

We looked at what NPV means and how you can explain it to someone else. Details around payback time, and the minimum acceptable rate of return (MARR) were discussed.

Slides Video Audio
17 September 03B

We saw how the MARR is used to compare an investment, and that DCFRR exceeds MARR for a worthwhile investment. We considered how to select among independent alternative investments.

Slides Video Audio
19 September 03C

We started to consider the effect of depreciation on cash flows.

Slides Video Audio
22 September 04A

We see how tax and depreciation combine to affect cash flows and TVM.

Slides Video Audio
24 September 04B

We will quickly wrap up the prior case study, and the consider the estimation of capital costs.

Slides Video Audio
26 September 04C

Tyler will be teaching the class today around sales and (non-capital) cost estimation. I will be away from campus.

Slides

Audio

Video recording of this class is not possible.

29 September 05A

We covered the start of capital cost estimation: looking at capacity factors and inflation factors

Slides

Video Audio
01 October 05B

We started looking at how to use the cost correlations from tables, and adjust them for capacity, materials, operations and inflation.

Slides

Video Audio
03 October 05C

We continued and finished the capital costing section.

Slides

Video Audio
06 October 06A

We will start (and finish) the final short section of the economics topic: sensitivity analysis

Slides

Video Audio

Some extra slides on economic problems were donated by Dr. Marlin. They are for you to complete in your own time. They are good practice for the midterm.

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