Engineering Economy
Project Description We all know that we cannot plan for every possible event in our future. However, for the purpose of this project you are going to develop an experimental plan for the first 10 years of your life following graduation.
How things really happen in the future may or may not work out as planned, but at least you can think about this as an interesting real-world application of the Engineering Economy. There are two major parts, A and B, of this project.
Part A The first part of the project involves simply documenting year-by-year events that you think have a high probability of occurrence in your life. Consider at least two potential life paths of the first 10 years following graduation.
For example, at year 0 (immediately following graduation), perhaps you will enter the engineering workforce, or maybe you are planning to attend graduate school immediately following your graduation, or maybe you are thinking of delaying entry into the engineering workforce by a few years to join the Peace Corps.
Are you thinking of graduate school later while working? Many engineers decide to obtain additional education in their field or at least attend short courses in topical areas from time to time to stay current. Do you plan to buy a house? How often will you buy a car? What about a car for the kids? What about a vacation home or a boat? Will you apply for your Professional Engineering license?
How many children will you have and when? Do you anticipate caring for an elderly relative? There are many, many questions to think about over the next 10 years. You can be creative this is not meant to be a hard and fast plan. Part B The second part of the project involves computing the net present value (NPV) or Present Worth (PW) for your plan and discussing what conclusion(s) you have reached as a result of the project.
For the purpose of financial calculations, you need to be as realistic as possible. Estimates of salary increases, including big jumps when completing additional education (like a Master’s or Ph.D.), can be obtained from the library and the internet.
The ability to communicate professionally is a very important part of this project. Each project requires an MS Excel worksheet and a Final Report. The report should be standalone so that anyone reading the report will know what it covers from the beginning. Your report must be neatly typed and include A cover sheet that at a minimum contains your name and the project assignment A concise and clear description of all events in your project on a year by year basis over 10 years. One paragraph per year should be sufficient to provide this information.
You should also list and briefly describe assumptions you have made for interest rates, regular raises, etc. The money you earn from your planned job(s) or investments will be treated as your expected gross revenues (GR) Describe the challenges when you conduct this project and how you overcome them.
A short bibliography with references (including the textbook). Websites are OK as references but identify the information you received from the URL. Use MS Excel for financial data organization, year by year and of course, for the computations.
After all the data has been entered, you will need to draw a cash flow diagram, compute the net present value (NPV) for your plan and discuss your conclusion(s) of the project. For more information on Engineering Economy read this: https://en.wikipedia.org/wiki/Engineering_economics
