Engineering Economics is a subject of vital importance to Engineers. This subject helps one understand the need for the knowledge of Economics for being an effective manager and decision maker.

The Economics theories are used to take decisions related to uncertain and changing business environment. Economics theories deal with the principles of demand, pricing, cost, production, competition, trade cycles, and national income and so on.

Engineering Economics refers to those aspects of economics and its tools of analysis most relevant to the Engineers decision making process.

The seven-step procedures used to assist the decision making are:

1. The recognition, definition and evaluation of the problem.

2. Search for potential as well as feasible alternatives.

3. Incorporating the basic cash flow approach.

4. Decision should serve the long term interest of the organisation.

5. Analysing the economic aspects of the engineering problem.

6. The preferred alternative is based on the total effort.

7. Attention to ensure feedback for improvement of operation.

Topics Covered in this App are Listed Below

Engineering Economics: Meaning and Characteristics

Engineering Economics Overview

Cash-Flow Concepts

Cash-Flow Diagrams

Interest Calculations

Interest Factors

Present Worth

Interest Periods

Sinking fund factor

Capital recovery factor

Series present worth factor

Other Interest Calculation Concepts

Comparison of Alternatives

Discount Rate

Inflation and the discount rate

Present Worth

Annual Cost

Rate of Return

Benefit-Cost Analysis

Identification of Relevant Benefits and Costs

Measurement of Benefits and Costs

Selection of Best Alternative

Treatment of Uncertainty