Be a 123 UNIVERSITY OF MORATUWA Faculty of Engineering Department of Civil Engineering BSc. Engineering Level 4- Semester 2 Examination (CE 4020 ENGINEERING ECONOMICS Time allowed: 2 Hours March 2013, ADDITIONAL MATERIAL: ‘Compounding Interest Factors Tables are available INSTRUCTIONS TO CANDIDATES: This paper contains 4 questions on 4 pages This examination accounts for 70 % of the module assessment. The total maximum mark attainable is 100, The marks assigned foreach question & sections there of are indicated in brackets. * This is closed book examination, ‘Answer the ONE question from Section A and TWO questions from Section B ‘Assume reasonable vals fr any data not given in ot withthe examination paper. Clearly State such assumptions made on the seipt 4 you have any doubt aso the interpretation ofthe wording ofa question, make your oun 21,200,000 25,120,000 Annual disbursements 5,910,000 8,800,000 Present value of fire-damaged building = 48,500,000 48,500,000.“ pected salvage vale of ie-damaged building afer 26,600,000 26600000 ye es oe 2 Ifthe required rate feu is 12%, which enovaton plan is preferable? [25 marks} Part? As a request fom students and faculty about the lack of parking spaces on campus, a parking farage on universty-owned property is being considered. Since there are no university funds ‘available forthe project, it will have to pay for itself from parking fees over 815 year period A 10 percent minimum rte of retun is considered reasonable for consideration of ew lage the structure should be. SS i 4 Based on the income and cost data shown below, determine how many levels Number — Cumulative construction ing ‘Income per year ee ee SECTION B. ‘Qucson2 {ors ring campy unt hese nerd uch year nreaedapaiy wi be elena: wo leaves hve ten ei ape ea rac il SEE meta a 0 ys canbe eel or pws ‘Since there is some doubt about how much business will increase in the future and since the Page Sotalo build a warehouse a3 large a5 is reluctant to go into debt deeply enough to b oe salable erry ted aerate sto ld anal warehouse 0 oe 1 oOn ition to it in 3 yeas for Rs 5,000,000. Annual costs for tas, insae, uae a eps ar expe tobe Rs 100,000 forthe ist thee years and Re 200,09 forthe next 7 years, The add two warchouse should hae a resale value of Rs 5,00. i W years. Based on a study period equal tothe lease contract and a 12 percent cost for capita, ee 4. Find which altemativeis preferable? {15 mats .Diseuss the limitation to your above choice 10 mais) Question 3 Port ‘Assets’ and ‘B" have the capabily of satisfactorily performing a required function. Asset 2 ps a intial cost of Rs 320,000 and an expected salvage value of Rs 40,000 at the end of is 4-year service life, Asset ‘A’ costs 90,000 less initially, with an economic life Lyear spotter than that of “Bs bur“A” has salvage value, and its annual operating costs exceed thase of ‘B’ by Rs 25,000. When the requted rate ofetum is 15%, 8. State which allernativeis prefened? (2marks] Part2 ‘hin why itis posible for both partes to profit by anexchange? [4 marks] Explain how physical efficiency below 100% may be converted to economie ‘efficiency above 100% with an appropriate example [4 mazks} ©. Why shoud the economic inerrtaton of engineering proposals be made by engineers? G5 marks} Question 4 . ee 1 Assume a frm borrowed Rs 40,000,000 just 36 month ago at 1% Per month interest and is ‘Tepaying the loan at the rate of Rs 1,000,000 per month, ‘From etme money was bomeved,bow many months wilt take to pay off he loan? aes can oy tanta Urhan Development Authority requests you under their ney ‘Salle the present vale of acquiring and mantaning Be cai rari 2000 pe yuo manu, “he —_-Peetuty (infinity) and if use interest rate as 6% ve YOU to find the to township develo Ment project 4 ieee Project to ction that costs Rs, to hold the road in al equivalent costs (5 marks) (5 marks} End of Question Paper