Engineering Economy – Case Study Research Paper

[meteor_slideshow slideshow=”arp1″]

A case study on the engineering economy course. The dead line of the assignment is today’s midnight. The description of the case study is between the next two lines:

This is an analysis that you can use in your everyday life: the evaluation of replacing your personal automobile. For this study, you are to economically evaluate the difference between keeping your current car (if you do not have one, pretend you do) and replacing your auto with (1) the current (new) version of your car and (2) a car of a different class (such as a small coupe with a sedan or a sports utility vehicle). Additionally, you must consider at least two different methods of financing the purchase. This may include the evaluation of a lump sum purchase, financing over a number of years or leasing the automobile.
Provide a detailed write-up of your analysis, including data estimates with sources. All assumptions must be stated and supported. Finally, any complications in the analysis, either with data collection, estimation, or in the economic evaluation itself, should be explained thoroughly. If possible, provide an alternative analysis or method in which to alleviate these difficulties.
This problem captures the variety of issues and complications relevant to replacement analysis, including the modeling of deterioration and technological change in cash flows. Additionally, multiple challengers are analyzed to highlight the possible solution scenarios. Issues relevant to investment analysis, such as different financing issues and the choice of a MARR, are also included. Note that altering the phrase “a personal automobile” to “a company automobile” would necessitate using after-tax analysis. Finally, the case study also envelops other course work, including statistics and forecasting, to supplement cash flow estimation topics.


A variety of costs and parameters are relevant to this analysis. Here is a list of costs plus possible sources of information that may be included. The difficulty in obtaining this information is also discussed. Note that the intent here is not to promote certain Web pages or companies, but rather provide examples of where information may be found. A user is encouraged to search for more sources on the subject. Many search engines exist, such as AltaVista [12] on the World Wide Web.


Obviously, the purchase price of a new automobile is the easiest cash flow to estimate because it is readily available. There are a variety of sources for this estimate, including manufacturer home pages, newspaper or television advertisements and individual dealers.


Salvage values are traditionally supplied in blue books that may be obtained from local libraries. However, the Kelley Blue Book [10] and Edmund’s blue book [5] Web pages have detailed salvage value estimates for many used automobiles based on the model year. The values are adjusted according to mileage and options on the automobile.


Every automobile purchased has a fuel efficiency rating for both city and highway driving. Deterioration of this efficiency over time is not easy to estimate, although personal automobile records may show changes in fuel consumption with respect to age and mileage. Also, sources such as Automotive Fleet [3] give estimates on the expected drop in fuel efficiency over time. Fuel prices themselves are easily obtained at any gas station, with historical data available through price indices from sources such as Standard and Poor’s Statistical Service [13] or the American Petroleum Institute [1].


They generally specify routine maintenance, such as tuning the engine and changing the oil, filters, tires and brake pads, in any owner’s manual (e.g., 3000 miles between oil changes), but if not, may be approximated by a mechanic or the driver. These costs are easily estimated from company advertisements such as Econo Lube, Jiffy Lube, Meineke, Midas and Pep Boys. These companies also have home pages containing information on expected repairs over time and on prices. The information may also be found in the annual estimates of Automotive Fleet [2].


Unexpected maintenance costs due to part failure or accidents are the hardest costs to estimate. However, Consumer Reports [8] publishes an annual magazine and book reviewing the reliability of certain cars, which should help provide an estimate in this area. Insurance companies provide estimates on possible accidents based on driver statistics, which should not change from car-to-car for one driver. However, the amount of damage (and thus cost) resulting from an accident depends on the car. This information is also available through Consumer Reports [9] with its safety inspections.


Because most states require drivers to have car insurance, these data are generally available to the student. And, students may inquire about different rates for different automobiles. Estimates may be obtained by telephone or through home pages such as Gieco On-Line Insurance Quotes [6].


Newspaper and television advertisements are very specific (read the fine print) about terms of leases and financing deals. These terms include the number and size of payments, up-front and end-of-term charges. Banks and loan institutions may provide similar information. On the Worldwide Web, loan information may be obtained from sources such as BanxQuote [4] or GMAC [7].

Place your order of custom research paper With us NOW. The assignment will be written from scratch by our qualified and experienced writers.

[meteor_slideshow slideshow=”arp2″] is committed to deliver a custom paper/essay which is 100% original and deliver it within the deadline. Place your custom order with us and experience the different; You are guaranteed; value for your money and a premium paper which meets your expectations, 24/7 customer support and communication with your writer. Order Now

Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.