The economic evaluation and justification of engineering projects and investment proposals are discussed. Cost concepts; financial and cost accounting; depreciation; the time value of money and compound interest; inflation; capital budgeting; equity, bond and loan financing; income tax and after-tax cash flow in engineering project proposals; measures of economic merit in the public sector; sensitivity and risk analysis. Applications: evaluations of competing engineering project alternatives; replacement analysis; economic life of assets; lease versus buy decisions; break-even and sensitivity analysis. Entrepreneurship and the Canadian business environment will be discussed.