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Econ 2152

Engineering Economics and Finance

Spring 2013

L1: Venue: 4504 Time: Monday 1:30pm-3:20pm

Course website: http://lmes.ust.hk

Instructor: YU, Yan

E-mail: yanyu@ust.hk

Phone: 2358-7627

Office Hours: Tuesday 1:30-2:30pm or by appointment

Office: Room 2341

Teaching Assistant: Zeng, Xueyang

E-mail: xzengab@ust.hk

Office Hours: Wednesday 2:30-3:30pm

Office: TBA

Course Description:

This course teaches a systematic way to evaluate the economic worth of proposed

solutions to engineering problems. Topics include: the valuation of a sequence of cash

flows; how to compare alternatives; dealing with uncertainty; demand and supply theory;

and the efficiency and equity of perfect competitive markets.

Course Intended Learning Outcomes:

On completion of this course, you will be able to:

1. Evaluate the economic worth of engineering projects; and compare and select the

best project(s) based on their economic worth. (SO3)

2. Explain and apply some fundamental concepts and theories in Economics. (SO4)

Teaching Approach

This course is primarily delivered through lectures.

Teaching & learning

activities

Roles in the course Course learning outcomes

addressed

Lectures Learn key concepts,

methods, and models and

their applications

1, 2

Homework assignments Practice problem-solving 1, 2

Essay Apply knowledge learned 1

There is no tutorial for this course.

Textbook:

Required: Customized textbook that consists of chapters from

Sullivan, Wicks, and Koelling’s Engineering Economy and Parkin’s Microeconomics.

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Grades:

Assessment Activities Weighting Course ILOs assessed

Best 3 of 4 Homework

assignments

18% 1,2

Essay 12%

1 midterm exam 25% 1,2

1 final exam 45% 1,2

Topic objectives (in order to achieve the course intended learning outcomes) will be

stated at the beginning of each topic. Exams will be based on topic objectives.

Essay: topic is “how to prepare for my retirement”. In the essay, you should include (1)

the past performance of possible investment alternatives and your estimate of future

expected return of those investment alternatives, (2) your estimate of your future income

based on your profession’s compensation data, (3) your life expectancy, based on

reasonable analysis, (4) how much saving(or other asset portfolio) is needed for your

retirement and how you will achieve it, (5) include measures to deal with uncertainty.

Essay is due April 29th

Monday at the beginning of lecture.

In the case of missed mid-term, its weight will be given to the final at a 5% discount. In

that case, your final will weight 65%. In the case of a missed final (with a valid excuse), a

make-up exam will be given.

Please note that the exams are close-book exams. You are NOT allowed to bring any

cheat sheet with you. Some relevant formulas will be printed at the cover page of the

exam paper.

Please check website for your grade of homework assignments and midterm as soon as

you get them back. Any discrepancy should be reported to TA within 1 week from the

date of returning your assignments and midterm. Late complaints will not be entertained.

Academic Integrity

Please read the information on academic integrity carefully and follow the

instruction: http://www.ust.hk/vpaao/ug-guide/integrity/ . You should be familiar

with Academic Honor Code and the content on Academic Integrity website.

I try my best to make the course requirement as clear as possible. When you have any

question and when you encounter any difficulty in studying, please do not hesitate to

consult me either in or out of class throughout the semester. I’d be delighted to help you

succeed in the course. Please remember that ultimately it is you who are responsible for

your performance in the course. It is that you earn the grade, not I give you the grade!

You know what grade you need to earn (or want to earn) for graduation, scholarships,

exchange opportunities, honors, etc. So, when the grade is out, one thing that I absolutely

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will NOT do is to change your grade because what you want (need) is different from

what you get.

Course Outline:

I. Fundamentals of Engineering Economy

1. Introduction: Sullivan Chapter 1, Parkin Chapter 1

2. Time value of Money: Sullivan Chapter 4

II. Tools for evaluating projects:

1. Single Project Evaluation Sullivan Chapter 5

1) Present Worth method

2) Future Worth method

3) Annual worth method

4) Internal Rate of Return Method

5) External Rate of Return Method

2. Comparing Alternatives Sullivan Chapter 6

3. Dealing with Uncertainty Sullivan Chapter 11

III. Basics of Economics

1. Demand and Supply Model Parkin Chapter 3

2. Efficiency and Equity Parkin Chapter 5

3. Government Actions in Markets Parkin Chapter 6 (if time allows)

Midterm is on April 8th

, Monday 7-9pm.Venue to be announced later. There is no

lecture on that day. Midterm covers chapter 4, 5, 6 of Sullivan part of the textbook.

Intended Learning Outcomes of Engineering Graduates

1) An ability to apply knowledge of mathematics, science, and engineering

appropriate to the degree discipline.

2) An ability to design and conduct experiments, as well as to analyze and interpret

data.

3) An ability to design a system, component, or process to meet desired needs within

realistic constraints, such as economic, environmental, social, political, ethical,

health and safety, manufacturability and sustainability.

4) An ability to function on multi-disciplinary teams.

5) An ability to identify, formulate, and solve engineering problems.

6) An understanding of professional and ethical responsibility.

7) An ability to communicate effectively.

8) An ability to understand the impact of engineering solutions in a global and

societal context, especially the importance of health, safety and environmental

considerations to both workers and the general public.

9) An ability to recognize the need for, and to engage in life-long learning.

10) An ability to stay abreast of contemporary issues.

11) An ability to use the techniques, skills, and modern engineering tools necessary

for engineering practice appropriate to the degree discipline.

12) An ability to Use the computer/IT tools relevant to the discipline along with an

understanding of their processes.