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Note for Engineering Economics - EE by Akash Sharma

  • Engineering Economics - EE
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  • Mechanical Engineering
  • B.Tech
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VII SEM ENGINEERING ECONOMY 10ME71 ENGINEERING ECONOMY Subject Code: 10ME71 Hours/Week: 04 Total Hours: 52 IA Marks : 25 Exam Hours : 03 Exam Marks : 100 PART – A UNIT – 1 08 Hours Introduction: Engineering Decision-Makers, Engineering and Economics, Problem solving and Decision making, Intuition and Analysis, Tactics and Strategy. Engineering Economic Decision, Maze. Law of demand and supply, Law of returns, Interest and Interest factors: Interest rate, Simple interest, Compound interest, Cash - flow diagrams, Personal loans and EMI Payment, Exercises and Discussion. UNIT – 2 06 Hours Present-Worth Comparisons: Conditions for present worth comparisons, Basic Present worth comparisons, Present-worth equivalence, Net Presentworth, Assets with unequal lives, infinite lives, Future-worth comparison, Pay-back comparison, Exercises, Discussions and problems. UNIT – 3 06 Hours Equivalent Annual-Worth Comparisons: Equivalent Annual-Worth Comparison methods, Situations for Equivalent Annual-Worth Comparisons, Consideration of asset life, Comparison of assets with equal and unequal lives, Use of shrinking fund method, Annuity contract for guaranteed income, Exercises, Problems. UNIT – 4 06 Hours Rate-Of-Return Calculations And Depreciation: Rate of return, Minimum acceptable rate of return, IRR, IRR misconceptions, Cost of capital concepts. 96 Causes of Depreciation, Basic methods of computing depreciation charges, Tax concepts, corporate income tax. PART – B UNIT – 5 05 Hours Estimating and Costing: Components of costs such as Direct Material Costs, Direct Labor Costs, Fixed Over-Heads, Factory cost, Administrative Over-Heads, First cost, Marginal cost, Selling price, Estimation for simple components. UNIT – 6 08 Hours Introduction, Scope Of Finance, Finance Functions: Statements of Financial Information: Department of Mechanical Engineering, A.C.E, Bangalore

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VII SEM ENGINEERING ECONOMY 10ME71 Introduction, Source of financial information, Financial statements, Balance sheet, Profit and Loss account, relation between Balance sheet and Profit and Loss account. Simple Numericals UNIT – 7 06 Hours Financial Ratio Analysis: Introduction, Nature of ratio analysis, Liquidity ratios, Leverage ratios, Activity ratios, Profitability ratios, Evaluation of a firm's earning power. Comparative statements analysis. Simple numerical UNIT – 8 07 Hours Financial And Profit Planning: Introduction, Financial planning, Profit planning, Objectives of profit planning, Essentials of profit planning, Budget administration, type of budgets, preparation of budgets, advantages, problems and dangers of budgeting. Introduction to Bench Marking of Manufacturing Operation. TEXT BOOKS: 1. Engineering Economy, Riggs J.L., 4TH ed. , McGraw Hill, 2002 2. Engineering Economy, Thuesen H.G. PHI , 2002 REFERENCE BOOKS: 1. Engineering Economy, Tarachand, 2000. 2. Industrial Engineering and Management, OP Khanna, Dhanpat Rai & Sons. 2000 3. Financial Mangement, Prasanna Chandra, 7th Ed., TMH, 2004 4. Finacial Management, IM PANDEY, Vikas Pub. House, 2002 Course Outcomes: On completion of this subject students will be able to: 1. Can choose the best alternative from various available alternatives. 2. Can understand and implement various rate of interest methods. 3. Can judge various depreciation values of commodities 4. Can learn in making investments in order to get good returns. Department of Mechanical Engineering, A.C.E, Bangalore

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VII SEM ENGINEERING ECONOMY 10ME71 5. Can get the help from various financial institutions supporting entrepreneurs. 6. Can make the project reports effectively. Department of Mechanical Engineering, A.C.E, Bangalore

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VII SEM ENGINEERING ECONOMY 10ME71 CONTENTS CHAPTERS Page Numbers Unit 01: Introduction 1-40 Unit02: Present-Worth Comparisons 41- 49 Unit 03: Equivalent Annual-Worth Comparisons 50-56 Department of Mechanical Engineering, A.C.E, Bangalore

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