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Engineering Economy and Financial Analysis

Copyright © October 9, 2023 by Robert Wayne Atkins, P.E.
All Rights Reserved.

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ISBN: 978-1737068082
Type of Book: Paperback
Book Size: 6 inches by 9 inches
Number of Pages: 260
Normal Price: $14.95


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Book Description on Amazon.com

This book contains a complete but concise explanation of all the important topics that are important in the application of engineering economy principles. It discusses present values, future values, annual values, gradients, and capitalized cost. It explains the options for evaluating a single alternative and for comparing multiple alternatives. It discusses inflation, depreciation, return on investment, breakeven analysis, benefit/cost ratios, and income taxes.

Unlike other engineering economy books, this book also discusses basic accounting concepts. It explains financial accounting concepts including balance sheets, income statements, and cash flow statements. It also clearly explains cost accounting concepts such as product costing and process costing. However, unlike the normal accounting textbook this book does not include the details about accounting that an engineer will never need to know.

The information in this book will help an engineer correctly analyze the cost and revenue issues associated with any project that the engineer is working on. This book will help an engineer include the appropriate financial data in his or her project proposal report in a format that can be easily and quickly understood and appreciated by managers and accountants.

This book was written specifically for industrial, systems, quality, mechanical, electrical, and chemical engineers, and for land surveyors. However, this book would also be extremely valuable to anyone who wanted to clearly understand the concepts of engineering economy, and the basic concepts of financial accounting and cost accounting. However, this is not an accounting textbook and it does not include the details about accounting that an accountant would need to know.

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Preface to
Engineering Economy and Finanical Analysis

I invested 37 years of my life teaching engineering and engineering technology courses at a major State University. During my 37 year teaching career a few of the courses that I taught to engineering and technical students were engineering economy, microeconomics, macroeconomics, financial accounting, and cost accounting. However, in the early 1990s the microeconomics, macroeconomics, and financial accounting courses were consolidated into the courses taught by the management department and our engineering department was no longer allowed to teach those courses.

Approximately once every two years we invited the executives of the companies that were hiring our graduates to meet with us on our campus. At that meeting we asked those executives to provide feedback on how we could improve our courses so that we could better prepare our graduates to be successful as engineers and as technicians at their respective companies. Those executives were consistently satisfied with the engineering and technical skills of our graduates. However, those executives consistently suggested that our graduates needed to improve their skills in the following two areas:

1. How to write proposals that were concise and that included all the necessary technical information in a format that could be easily understood by managers and not just by engineers.

2. How to enhance their proposals with financial information that was formatted in the way that managers and accountants could easily understand and that could also be used by these individuals for decision making purposes.

Every two years when we met with the management department they would listen politely to our requests for modifying their courses to accommodate our engineering and technical students. But the actual changes they made to their courses were trivial. The reason was because those courses were also taken by most of the other students at the university and our engineering and technical students were only a small percentage of all the students enrolled in those courses.

When I retired in 2021 I decided that engineers and technicians needed a book that was written just for them. Therefore I wrote this book and it includes the financial knowledge that engineers and technicians need to know in order to be successful in their chosen professions. But it does not include all of the accounting details that are normally taught in a university accounting course.

Respectfully,
Robert Wayne Atkins, P.E.
October 2, 2023

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Table of Contents

Chapter		Page
1	Introduction	1
2	Computers and Software	5
	Engineering Economy:
3	Introduction to Engineering Economy	9
4	Basic Concepts and Equations	17
5	Combining Factors or Multiple Factors	35
6	Interest Rates: Nominal, Effective, and Continuous	47
7	Comparing Alternatives using Present Value, Future Value	57
8	Comparing Alternatives using Annual Cost	71
9	Rate of Return for a Single Alternative	81
10	Rate of Return for Multiple Alternatives	91
11	Benefit / Cost Ratios	103
12	Retention / Replacement of Assets	115
13	Breakeven Analysis	127
14	Inflation	141
15	Depreciation and Depletion	151
16	Income Taxes	165
	Financial Analysis:
17	History of Financial Accounting	175
18	Basics of Financial Accounting	179
19	Balance Sheets	189
20	Income Statements	195
21	Cash Flow Statements	201
22	Cost Accounting and Management Accounting	206
23	Product Costing and Process Costing	207
24	Overhead Allocation Methods	217
25	Other Accounting Concepts	223
26	Stakeholders	227
	Appendix: Reference Tables	229
	Index	253
	About the Author	246

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Grandpappy's e-mail address is: RobertWayneAtkins@hotmail.com