Case Study
Engineering Economic Analysis Case Study
Case Name The Smithson’s Mortgage Case Study Teams This case is designed to be conducted by a team of students. The discussion, questioning, and resolution of differences is an important part of the learning experience. Another significant advantage is the sharing of the workload in preparing the final case study report. Knowledge Background This case draws heavily on the material presented in Chapters 2 and 3 of Principles of Engineering Economic Analysis, 4th Edition by White, Case, Pratt, and Agee, particularly Section 3.4 (Principal Amount and Interest Amount in Loan Payments). To a limited extent it draws on concepts from Chapter 4 (Measuring the Worth of Investments), Chapter 5 (Comparison of Alternatives), and Chapter 6 (Depreciation and Income Tax Considerations. The case can be meaningfully addressed after covering Section 3.4. Deliverables Case Report - one per team (refer to attached page for additional information) Peer Evaluations - every individual (refer to attached page for additional information) Additional Notes to Instructor ( A reasonable amount of time to complete this case is 4-6 weeks. ( The detailed specification of rounding rules in the case is designed to maintain consistency in the responses; otherwise, slight differences in rounding approaches can lead to large differences in final retirement account balances. ( An interesting embellishment to the case is to ask students to examine different objectives for the Smithson’s (e.g., minimizing interest paid rather than maximizing retirement account balance).
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Case Description
The Smithson’s Mortgage
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Paul and Leslie Smithson are buying a new house. They have saved for several years to accumulate a down payment and have now found a house that is just perfect for their needs. It is a beautiful three bedroom Tudor house in a quiet neighborhood in the suburbs. With the help of their real estate agent and after several rounds of
Case Name The Smithson’s Mortgage Case Study Teams This case is designed to be conducted by a team of students. The discussion, questioning, and resolution of differences is an important part of the learning experience. Another significant advantage is the sharing of the workload in preparing the final case study report. Knowledge Background This case draws heavily on the material presented in Chapters 2 and 3 of Principles of Engineering Economic Analysis, 4th Edition by White, Case, Pratt, and Agee, particularly Section 3.4 (Principal Amount and Interest Amount in Loan Payments). To a limited extent it draws on concepts from Chapter 4 (Measuring the Worth of Investments), Chapter 5 (Comparison of Alternatives), and Chapter 6 (Depreciation and Income Tax Considerations. The case can be meaningfully addressed after covering Section 3.4. Deliverables Case Report - one per team (refer to attached page for additional information) Peer Evaluations - every individual (refer to attached page for additional information) Additional Notes to Instructor ( A reasonable amount of time to complete this case is 4-6 weeks. ( The detailed specification of rounding rules in the case is designed to maintain consistency in the responses; otherwise, slight differences in rounding approaches can lead to large differences in final retirement account balances. ( An interesting embellishment to the case is to ask students to examine different objectives for the Smithson’s (e.g., minimizing interest paid rather than maximizing retirement account balance).
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Case Description
The Smithson’s Mortgage
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Paul and Leslie Smithson are buying a new house. They have saved for several years to accumulate a down payment and have now found a house that is just perfect for their needs. It is a beautiful three bedroom Tudor house in a quiet neighborhood in the suburbs. With the help of their real estate agent and after several rounds of