IE 430 -
This is essentially Engineering Economy. Students will learn the roles of interest rate, time value of money, and economic equivalence. Methods for justifying whether an engineering project is economically acceptable will be introduced. These methods include the Present Worth (PW), Future Worth (FW), Annual Worth (AW), Internal Rate of Return (IRR), and External Rate of Return (ERR). To choose the best project among several mutual-exclusive projects, the procedure of the Incremental Analysis is needed for the IRR and ERR methods. Students will study the computations of the cash flow when there are taxes liability or credit, market inflation, exchange rates fluctuation, and property depreciation. The deterministic analysis (replacement analysis, beneﬁt-cost ratio analysis, breakeven analysis, sensitivity analysis, and decision making considering multi-attributes) and the probabilistic analysis (expected PW, risk, decision tree, and cash-flow simulation) are introduced with examples. Ultimately, students will be able to create a complete cash-flow table in EXCEL, report the findings, and make a decision under various economic settings.3 undergraduate hours. 3 or 4 graduate hours. Prerequisite: IE 300.