Course Information Package
|Course Unit Title||ENGINEERING ECONOMICS|
|Course Unit Code||MEM502|
|Course Unit Details||MSc Engineering Management (Electives Courses) -|
|Number of ECTS credits allocated||7|
|Learning Outcomes of the course unit||By the end of the course, the students should be able to:|
|Mode of Delivery||Face-to-face|
|Recommended optional program components||NONE|
|Course Contents|| Introduction to Business Finance |
- Understanding Financial statements
- Profit vs. Cash control of cash flow and its implications
- Interpretation of Accounts
- Costing Techniques to ascertain, recover and control costs
- Marginal Costing and Contribution Analysis
- Absorption and Activity Based Costing
- Evaluating Business and Engineering Assets:
- Present-Worth Analysis
- Rate of Return Analysis
- Project Cash Flow Analysis
- Project Cost Elements
- Project cash flow activities
- Effect of inflation
- Mean-variance optimization and efficient frontiers
- Cost of Capital and the capital asset pricing model (CAPM)
- Project financing
- Debt versus equity
- Cost of capital with different sources of financing
- Capital budgeting with different sources of financing
- Handling Project Cash Flow Risk
- Methods of describing Risk (Sensitivity Analysis, Scenario Analysis)
- Including Risk in Investment evaluation (Probabilistic approach)
- Investment strategies under Uncertainty (Real Options)
- Rate of Return Analysis: Use Microsoft Excel to formulate investment decisions and evaluate their rate of return.
- Project Cash Flow Analysis: Use Microsoft Excel to structure Project Cash Flows and estimate their Rate of Return.
- Mean-variance optimization in Microsoft Excel and construction of efficient frontiers
- Project Uncertainty: Use Microsoft Excel to conduct sensitivity analysis and scenario evaluation of particular projects’ cash flows.
- Use Microsoft Excel to build scenario trees for investment decisions under uncertainty and valuation of options
- Investigate realistic case studies’ feasibility using Microsoft Excel to set up the problem and conduct sensitivity analysis to examine alternative scenarios.
- The students are expected to read and review 4-5 papers from relevant scientific and business journals.
|Recommended and/or required reading:|
|Planned learning activities and teaching methods|| The taught part of course is delivered to the students by means of lectures, conducted with the help of computer presentations. Lecture notes and presentations are available through the web for students to use in combination with the textbooks. |
Lectures are supplemented with coursework and laboratory work carried out on Microsoft Excel. During laboratory sessions, students learn Engineering Economy functions at Microsoft Excel and develop simple Project Cash flow applications to evaluate critical parameters such as Net Present Worth or Internal Rate of Return of a proposed engineering investment.
The course material (notes, exercises, forum, etc) is maintained on the university’s e-learning platform
|Assessment methods and criteria|
|Language of instruction||English|