Difference between revisions of "Engineering economics - 2012"
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* Please see [[Media:NPV-calculation-depreciation-tax.pdf | this PDF slide 80]] from the course notes. Note the following relationships | * Please see [[Media:NPV-calculation-depreciation-tax.pdf | this PDF slide 80]] from the course notes. Note the following relationships | ||
** \( \text{G} = \text{C}+\text{E} \) | ** \( \text{G} = \text{C}+\text{E} \) | ||
** \( \text{H} = \text{(A-B)-G}\) | ** \( \text{H} = (\text{(A} - \text{B}) - \text{G}}\) | ||
** H = (A-B) - G | ** H = (A-B) - G | ||
** J = \(\text{H} \cdot p_\text{tax}\) | ** J = \(\text{H} \cdot p_\text{tax}\) | ||
Revision as of 20:11, 25 September 2012
| Class date(s): | 11 September 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 | Amazon | |
| Fraser et al. | Engineering Economics in Canada (3rd edition, or earlier) | McMaster | Amazon | |
| Fraser et al. | Global Engineering Economics (4th edition, or earlier) | McMaster | Amazon | |
| Park, Zuo and Pelot | Contemporary Engineering Economics, a Canadian perspective (3rd edition, or earlier) | McMaster | NA | |
| Stermole and Stermole | Economic Evaluation and Investment Decision Methods (13th edition, or earlier) | NA | Amazon | |
| Turton et al. | Analysis, Synthesis and Design of Chemical Processes (4th edition, or earlier) | McMaster | Amazon |
Class slides
The slides are in tab 3 of the notes.
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.
- Slides: We cover slides 1 to 24. Slides 19, 20 and 23 are exercises for you to do on your own.
- Audio and video recording of the class
- Self-learning: here's an interesting PDF explaining time value of money and engineering economic concepts
- Enrichment: I mentioned an article about packed distillation towers in class today.
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
- We will cover Depreciation, slide 63 to 80.
- 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):
- CCA for individual tax payers
- Assets that you may depreciate as an individual
- List of eligible business expenses to reduce tax
- Basic information on CCA
- Classes of depreciable property
- CRA's guidance on calculating CCA
- The tax form for businesses claiming CCA
- CRA's guidance on business expense vs capital expense
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.
- Please see this PDF slide 80 from the course notes. Note the following relationships
- \( \text{G} = \text{C}+\text{E} \)
- \( \text{H} = (\text{(A} - \text{B}) - \text{G}}\)
- H = (A-B) - G
- J = \(\text{H} \cdot p_\text{tax}\)
- L = NCFAT = (A - B) - J = A - (B+J) = Net profit - tax = Total income - (After tax cash flow out): this is the line we use for our NPV calculation
- M = \( \displaystyle \frac{\text{L}}{\left(1+i_\text{MARR}\right)^n}\)
27 September 2012
- We will cover sensitivity analysis on an NPV, slides 104 to 115