Semesters Offered

Learning Objectives

The objective of this course is to provide students with an introduction to the financial and cost analysis aspects of product engineering. This course introduces key elements of traditional engineering economics including interest, present worth, depreciation, taxes, inflation, financial statement analysis, and return on investment.  This course also provides an introduction to cost modeling as it applies to product manufacturing and support.  Cost modeling topics will include: manufacturing cost analysis, life-cycle cost modeling (reliability and warranty), and cost of ownership.

Topics Covered

  • Week 1: Course Introduction, Eng. Econ Intro, Time Value of Money, Simple Interest
  • Week 2: Compound Interest, Notation, Cash Flow and Diagramming, Uniform Series, Sinking Fund, Arithmetic Gradient, Geometric Gradient
  • Week 3: Combining Factors, Economic equivalence
  • Week 4: Discount Rate Calculation/WACC, Present Worth, Future Cost, Capitalized Cost Analysis
  • Week 5: Bonds, Annuities, Rate of Return
  • Week 6: Inflation, Review
  • Week 7: Exam I, Start-Up Company Financing
  • Week 8: Depreciation and Taxes, Real Options Analysis
  • Week 9: Cost Modeling Introduction, Process Flow Modeling, Parametric and CERs Overhead and ABC
  • Week 10: Financial Statement Analysis, Yield and Test
  • Week 11: Test and Rework, Review
  • Week 12: Exam 2, Cost Benefit Analysis
  • Week 13: Learning Curves, Life-Cycle cost and sustainment introduction, Reliability
  • Week 14: Reliability and Warranty
  • Week 15: Review, Final Exam


Additional Course Information



  • Required – Engineering Economy, 7th Edition, L. Blank and A. Tarquin, McGraw Hill, 2012
  • Suggested – Cost Analysis of Electronic Systems, P. Sandborn, World Scientific, 2012

Class/Laboratory Schedule 

  • Two 75 minute lectures per week
Last Updated By 
Peter Sandborn, June 2017