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MS-291: Engineering Economics

(3 Credit Hours)

Syllabus & Study Plan

Week Contents Reading Materials
Week 1 Foundation of Engineering Economy, Chapter 1: (B&T 2012)
to various cost concepts
Week 4 Factors: How time and Interest Affect Money Chapter 2: (B&T 2012)

Nominal and Effective Interest Rates Chapter 3: (B&T 2012)

Week Contents Reading Materials

Week 5 Present Worth Analysis, Annual Worth Chapter 5 & Chapter 6:
to Analysis (B&T 2012)
Week 8 Rate of Return Analysis: Single Alternative Chapter 7 & Chapter 8:
and Multiple Alternatives (B&T 2012)

Benefit/Cost Analysis and Public Sector Chapter 9: (B&T 2012)


Week 9 Mid-Term


Syllabus & Study Plan (II)

Week Contents Reading Materials
Environmental Impact Assessment Reading Material will be

Week 10 Project Financing and Noneconomic Chapter 10: (B&T 2012)

to Attributes
Week 14 Independent Projects with Budget Chapter 12: (B&T 2012)
Breakeven and Payback Analysis Chapter 13: (B&T 2012)

Week Contents Reading Materials

Week 14 Effects of Inflation Chapter 14: (B&T 2012)
to Depreciation Measures Chapter 16: (B&T 2012)
Week 15

Week 16 Final Term

Recommended Books

Reference book for Economics

Major Course Book
Or any other book with title
Economics and is for
undergraduate level


Grading Policy
Grading Policy
Class participation: 5%
Assignments: 5% (3 in total with 1+1+3 marks)
Quizzes: 15% (including announced+ SQ)
Mid-term Exam: 35%
Final Exam: 40%
Attendance: 100 % (80 min.) to qualify to sit
in the final examination
Please note down that final term will consist of complete
course covered rather than course covered after mid-term

Consulting Hours
• I am 24/7 sort of available person
• But Due to having additional administrative
responsibility sometime it may be difficult
for you to get me on spot
• Before visiting me, make sure I am in
• My email is:
• Ms. Sabahat email:


Chapter 1
Foundations Of
Engineering Economy

MS291: Engineering Economics

Lecture 1

Course Instructor: Dr. Muhammad Sabir

Contents of the Chapter

 What is Economics?
 Why Economics for Engineers ?
 What is Engineering Economy/Economics ?
 How to Performing Engineering Economy Study ?
 Some Basic Concepts
– Various cost concepts
– Time value of money (TVM)
– Interest rate and Rate of Returns
– Cash Flow
– Economic Equivalence
– Simple and compound interest rates
– Minimum Attractive Rate of Return


Setting the Scene

 Lets start with a simple question ? What is
Economics ? Anyone ?

 There are variety of definitions of Economics but let

me place the most relevant one for this course

 A social science that studies how individuals, firms,

governments and nations make choices on
allocating scarce resources to satisfy their
unlimited wants

Why Engineer Need to know about

Economics ?
 Individuals, Engineers, Managers all made choice
among various alternatives in their every day life
..Any Example ?

 Mostly these choice is associate with money (more

specifically capital or capital funds) but money (or
resources) is limited

 The selection of any choice depends on the

expected future return of each alternative

 Engineers plays a vital role in “such decision” due

to their ability and experience to design, analyze
and synthesize


Thank You