Finance in Engineering

4 Key excerpts on "Finance in Engineering"

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  eBook - PDF

  The Making of an Expert Engineer

  • James Trevelyan(Author)
  • 2014(Publication Date)
  • CRC Press

    (Publisher)

  That is why the preceding chapters on technical coordination and project management are so important for your long-term development. In this chapter, I will cover some basic ideas about finance and investment; skip any sections where you feel confident that you can perform the analysis by yourself, but make sure that you test your knowledge with the quiz before moving on. Practice concept 70: Engineering needs money from investors Novice engineers often think that . . . Expert engineers know that . . . Finance is a business or management issue, not an engineering one; engineers only have to think about the budget they have been given. Finance enables engineering. Engineering relies on investment from people. The cost of finance and amount available depends on the risk perceptions of investors. Engineers prepare the estimates from which investors make their decisions. Understanding investment decisions 373 Describe a recent experience with financial decision-making. If you have not been exposed to this in your work, describe the most recent major financial decision you had to make in your private life and how you made it. (Prepare to copy and paste into the online learning system.) Most people who make investment decisions have neither the time nor the technical insight to fully evaluate the benefits and risks before making an investment. No one can forecast the future with any great certainty, particularly with respect to economic conditions. Even the best economic modelling cannot predict, for example, when an unexpected political development on the other side of the world might cause panic buying and speculator-driven price rises in gold or oil, for example. In the past few years we have seen large and rapid changes in energy costs. The international price of oil, for example, has varied between around US $40 per barrel and US $140.

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  eBook - PDF

  Applied Probabilistic Calculus for Financial Engineering

  An Introduction Using R

  • Bertram K. C. Chan(Author)
  • 2017(Publication Date)
  • Wiley

    (Publisher)

  1 Introduction to Financial Engineering 1.1 What Is Financial Engineering? In today’s understanding and everyday usage, financial engineering is a multidisciplinary field in finance, and in theoretical and practical economics involving financial theory, the tools of applied mathematics and statistics, the methodologies of engineering, and the practice of computer programming. It also involves the application of technical methods, especially in mathematical and computational finance in the practice of financial investment and management. However, despite its name, financial engineering does not belong to any of the traditional engineering fields even though many financial engineers may have engineering backgrounds. Some universities offer a postgraduate degree in the field of financial engineering requiring applicants to have a background in engineering. In the United States, ABET (the Accreditation Board for Engineer- ing and Technology) does not accredit financial engineering degrees. In the United States, financial engineering programs are accredited by the Interna- tional Association of Quantitative Finance. Financial engineering uses tools from economics, mathematics, statistics, and computer science. Broadly speaking, one who uses technical tools in finance may be called a financial engineer: for example, a statistician in a bank or a computer programmer in a government economic bureau. However, most practitioners restrict this term to someone educated in the full range of tools of modern finance and whose work is informed by financial theory. It may be restricted to cover only those originating new financial products and strategies. Financial engineering plays a critical role in the customer-driven derivatives business that includes quantitative modeling and programming, trading, and risk managing derivative products in compliance with applicable legal regulations.

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  Available until 5 Dec |Learn more

  Engineering Economics for Aviation and Aerospace

  • Bijan Vasigh, Javad Gorjidooz(Authors)
  • 2016(Publication Date)
  • Routledge

    (Publisher)

  2 Foundations of Engineering Economics and Finance The immediate effect of the deficit is to make you feel good, like when you go on a trip and pay later. You feel good, and then you get a hangover. The deficit makes you feel good – until you pay later. Franco Modigliani Nowadays, most companies that hire engineers are expecting them not only to participate in the decision-making process by evaluating the projects’ technical aspects but also to provide an economic assessment of projects of different sizes. Engineers are expected to perform cost analyses, compare alternatives, and make decisions by considering both the technical and the financial virtue of projects. Engineering economics equips engineers with a collection of skills and techniques that will allow them to analyze, evaluate, and compare alternatives on an economic basis. In practice, engineering economics involves decision making based on cash flows associated with a given project, life of the project, and interest rates. In this chapter, we discuss the fundamental concepts of engineering economics and introduce the basics of evaluating the financial merit of projects. We will make a distinction between simple and compound interest, calculate the future value of a single present amount, the present value of a future single sum, and the future and present values of streams of non-equal amounts

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  eBook - ePub

  Risk and Financial Management in Construction

  • Simon A. Burtonshaw-Gunn(Author)
  • 2017(Publication Date)
  • Routledge

    (Publisher)

  PART 2                   Financial Management Passage contains an image

  CHAPTER 6 Financing of Construction Projects

  Basic Economic and Financial Principles of Construction Project Investments

  This first chapter in the second half of this book commences with a look at investment in construction projects. In this case the term ‘investment’ should be regarded as a financial involvement in a project undertaking, aimed at gaining a benefit in the future; usually profit, but not necessarily so. This said, it is significant that the value of such investment expenditure or financial involvement which takes place is a known entity while the future potential benefits, that is, the profit from the investment, is only a possibility and not therefore secure.

  By definition ‘to invest’ means to designate financial means not for consumption, but for specific profits to be earned in the future. On this basis, investment per se may occur in a number of ways; for instance through depositing money in a bank, buying bonds, stocks, machines or real estate property. As mentioned above the future benefits are not secured; therefore, every financial investment must be associated with an element of risk which must be analyzed as thoroughly as possible in order to eliminate its negative consequences. In order to plan the future investment or project undertaking effectively, it is often necessary to consider many various aspects of the investment activity. Such analysis is aimed not just at finding the current and future possibilities of the investment’s performance, but also the threats to those projects.

  Understanding and using the tools of financial assessment of investment undertakings is a natural element of the economic education of every investor regardless of where the funds may be invested. The investment process itself can encompass the entire project development activity and usually consists of the three phases:

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