NEW JERSEY INSTITUTE OF TECHNOLOGY
DEPARTMENT OF ENGINEERING TECHNOLOGY
INDUSTRIAL COST ANALYSIS: MNET 414-102
Instructor:
Dr.
Email: arijit.sengupta@njit.edu, Website: http://www-ec.njit.edu/~sengupta
Classes: Mondays,
Wednesdays & Thursdays
Office hours: There are no scheduled office hours for the summer session. However, you may make a prior appointment by email or telephone to meet me at my office. You can always email me with your questions.
Textbook: Engineering economic analysis, 9th edition by D.G. Newnan et al.
Course objective: This course will teach you the techniques used in justifying a capital expenditure decisions in industry. You will learn: (1) Different types of manufacturing and product costs, and the decision making process for a capital expenditure, (2) Concepts of time value of money, (3) Use of several economic analysis models: present worth, uniform cost, rate of return analyses etc. (4) How to take into account the effects of depreciation, income tax on such economic analyses, and (5) How to perform a replacement analysis of an existing equipment. This course will be fairly mathematical. Mostly the concepts and theories will be learned through solving numerical problems.
Course
outline
|
Class |
Date |
Topic |
Home work |
|
1 |
5/23M |
Introduction to engineering economy. Compound interest, single series formulas |
|
|
|
5/25W |
CLASSES CANCELLED (TWO OPTIONAL REVIEW CLASSES WILL BE USED TO MAKE UP THESE CANCELLATIONS) |
|
|
|
5/26R |
||
|
|
5/30M |
MEMORIAL DAY – NO CLASS |
|
|
2 |
6/1W |
Uniform series, Arithmetic and Geometric gradient formulas. |
|
|
3 |
6/2R |
Nominal and effective interest. Present worth analysis. |
|
|
4 |
6/6M |
Infinite analysis period and capitalized cost. More on present worth analysis. |
|
|
5 |
6/8W |
Annual cash flow analysis. |
|
|
6 |
6/9R |
More on annual cash flow analysis. Rate of return analysis. |
|
|
7 |
(6/11S) |
REVIEW CLASS
(OPTIONAL) |
|
|
8 |
6/13M |
Incremental analysis. Payback period analysis. MID TERM EXAM |
|
|
9 |
6/15W |
Break even analysis |
|
|
10 |
6/16R |
Depreciation. |
|
|
11 |
6/20M |
More on depreciation. |
|
|
12 |
6/22W |
Income tax and after tax cash flow analysis. |
|
|
13 |
6/23R |
After tax cash flow analysis review Replacement analysis. |
|
|
14 |
(6/25) |
REVIEW CLASS
(OPTIONAL) |
|
|
15 |
6/27M |
FINAL EXAM |
|
Grading
mID TERM - 30%, FINAL -
50%, ATTENDANCE AND PROJECT - 20%.
A: 90% and above; B+:
85-89%, B: 80-84%, C+: 75-79%, C: 70-74%, D: 60-69%, F: Below 60%.
Lateness
& attendance policies
You are strongly encouraged to come in time
for the lectures and not to miss any lecture. If you come late and the lecture
has started, you may find it difficult to follow the lecture. Consequently you
may loose interest in the subject. Also, late entries cause a general
disruption of the lecture and thus affect the whole class. If you are absent,
then it is your responsibility to catch up on the topics discussed in the class
you missed and to solve the homework assignments due in time. If you miss a
lecture, it generally takes about three to four times more effort to grasp the
subject matter from the book. Frequent lateness or absenteeism will adversely
reflect on your final grade. Conversely, on time and good attendance may give
you some extra advantage towards your final grade.
Homework
assignments
The homework assignments will be NOT BE
collected and graded. The solution of homework problems will be discussed in
the class and the solutions will be posted in the web
(www-ec.njit.edu/~sengupta). You can download the solutions to homework from
web. You are strongly recommended to do the homework assignments YOURSELF to
understand the subject matter and follow the subsequent lectures.
Computer
use
You are expected to have an access to a
personal computer with a spreadsheet program such as Excel. Use of spreadsheet
financial functions will be discussed in the lecture. The textbook provides
many examples on Excel spreadsheet applications on the subject matter. If you
need hands-on assistance on use of spreadsheet financial functions, you must
make an appointment with me and come to my office for a demonstration.
You are strongly encouraged to use of the spreadsheet software. Many
tedious calculations in economic analysis can be simplified using spreadsheet
financial functions. It will come handy for the economic analysis calculations
in verifying many homework problems. However, you will not be able to
use such software during exams.
Tests
The tests will be closed book and closed note
exams. You will be allowed to bring one 8"x11" page cheat sheet. Financial
tables will be supplied with the exams, when necessary. Mostly the exams
will involve solving FIVE TO SIX numerical problems covering the subject area.
The exams will be cumulative. Exams may not be missed for the convenience of
the student. If you must miss one of the
exams, and you have a University excused absence (medical, death in the
immediate family, legal entanglement, or authorized university business), you
may seek permission to take a make-up exam. You should know
that the professor scrutinizes these requests very carefully and prior notice
of the absence is an important element in the decision. If for any reasons
beyond your control you must miss the final exam, you may apply for a grade of
incomplete (I) in the course.