ISyE 513: Analysis of Capital Investments

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ISyE 513 - Analysis of Capital Investments

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Catalog Description

513 Analysis of Capital Investments. (Crosslisted with ME 513.) I or II; 3 cr. A second course in quantitative methods for analyzing capital investments in technological environments, both public and private. Replacement models; comparison of alternative investment models; risk analysis; case studies. P: Ind Engr 313, Ind Engr 323, Stat 311.

Course Prerequisite(s)

ISyE 313
ISyE 323
STAT 311

Prerequisite knowledge and/or skills

Fundamentals of engineering economy
Basic knowledge of operations research
Introductory course in probability and statistics

Textbook(s) and/or other required material

D.G. Luenberger, "Investment Science," Oxford University Press, New York, 1998; ISBN 0-19-510809-4.
Additional readings may be assigned.

Course objectives

Develop advanced knowledge of theories, tools and techniques for analyzing complex capital investments.
Be able to recognize, formulate and, using prepared computer packages, solve capital investment problems.
Understand the reasons why the applicable techniques work, and the effects on the solutions of variations in the data or in the assumptions underlying the models.
Be able to formulate recommendations based on results of the modeling process and communicate them to individuals who are not specialists in the methods used.

Topics covered

Brief review of principles of engineering economy and capital budgeting
Capital planning and budgeting
Financing considerations, including interest rate models
Capital Asset Pricing Model
Portfolio analysis
Risk analysis and simulation
Formulation and pricing of real options as models of uncertainty in capital investment

Class/laboratory schedule

Three 50-minute sessions per week

Contribution of course to meeting the professional component

This course contributes primarily to the students' knowledge of engineering topics, and does provide design experience.

The following statement indicates which of the following considerations are included in this course: economic, environmental, ethical, political, societal, health and safety, manufacturability, sustainability.

Economic and societal considerations are included in this course.

Relationship of course to undergraduate degree program objectives and outcomes

This course primarily serves students in the department. The information below describes how the course contributes to the undergraduate program objectives.

This course supports program objectives 1, 2 and 5 of the Industrial Engineering department.

Assessment of student progress toward course objectives

One or two midterm exams
Homework assignments
A two-hour final examination

Person(s) who prepared this description

Stephen M. Robinson

Copyright 2007 The Board of Regents of the University of Wisconsin System
Date last modified: 28-Dec-2007
Content by: prpeters@engr.wisc.edu
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