💼 Engineering Economics & Capital Asset Decisions: NPV, Payback, LCC & Repair-vs-Replace

Turn any engineering proposal into a defensible financial case using standard discounted-cash-flow methods — payback, NPV, IRR, life-cycle cost, equivalent annual cost, depreciation and the repair-vs-replace and lease-vs-buy decisions. The course is organized into 11 modules, ending with a final exam (pass mark 80%). It is independent, free exam-preparation training — not an official or accredited review course.

What you'll learn

• Why a Dollar Today Beats a Dollar Tomorrow: The Time Value of Money
• Building a Cash-Flow Model: Inflows, Outflows and the Timeline
• Payback Period: The Quick Screen and Its Traps
• Net Present Value (NPV): The Gold Standard of Project Appraisal
• Internal Rate of Return (IRR) and the Hurdle Rate
• Life-Cycle Cost & Total Cost of Ownership (LCC / TCO)
• Repair vs. Replace: Equivalent Annual Cost & Economic Life
• Lease vs. Buy: After-Tax Discounted Comparison
• Depreciation, Book Value and the Tax Shield
• Building the Business Case: CMMS ROI, Retrofits and Solar Payback
• Risk, Sensitivity and Presenting a Defensible Case

Learning objectives

• Apply the time value of money to convert any future or recurring cash flow into a present or annual-equivalent value using discount factors.
• Compute and correctly interpret simple payback, discounted payback, net present value (NPV) and internal rate of return (IRR) for a capital project.
• Build a complete life-cycle cost (LCC) / total cost of ownership (TCO) model that includes acquisition, energy, maintenance, downtime and disposal.
• Decide repair-versus-replace objectively using equivalent annual cost (EAC) and the economic life of an asset.
• Structure a lease-versus-buy analysis on an after-tax, discounted basis.
• Select an appropriate depreciation method and compute book value, and understand how depreciation and tax affect cash flow.
• Construct the business case for efficiency and technology investments — CMMS ROI, LED and other retrofits, and solar payback.
• Avoid the classic appraisal errors (ignoring discounting, mixing nominal and real, sunk costs, optimistic single-point inputs) and present results that survive financial scrutiny.