SYSEN 5140

Economic and Financial Decisions for Engineers

Course Description

Course information provided by the Courses of Study 2024-2025.

This course aims at empowering engineers with training in accounting, finance and engineering economics needed to make financial decisions concerning capital investments that have prolonged monetary impacts. These methods are suitable for problems involving capital allocations and investments as well as evaluation and selection of engineering projects. Students learn how to define and select appropriate economic criteria for the evaluation of alternatives as well as how to use proper methods for evaluating alternatives under deterministic conditions. 

When Offered Spring.

• Be able to read and prepare major financial statements (in an easier context for the latter); perform financial ratio analyses.
• Be able to perform cost estimation and cost-driven design optimization to prepare income statements and cash flow statements for further economic analysis.
• Apply concepts of time value of money and equivalence factors to compute, by hand and/or by spreadsheets, economic criteria for a given set of cash flows and use them to evaluate economic viability of projects or to choose the best option from among mutually exclusive projects, including the use of benefit-cost ratios to evaluate public sector projects.
• Prepare after-tax cash flows for economic analysis taking into consideration the effects of depreciation, taxes, and inflation on project cash flows.
• Compute cost of capital and perform capital budgeting/allocation to determine an appropriate minimum attractive rate of return (MARR) for use in economic analysis.
• Use decision trees to help make complicated sequential decisions and to estimate value of additional information, as well as to understand the general approach for dealing with multiple criteria such as risk-return tradeoffs.

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