Quiz II - Engg 404 - 2022

Republic of the Philippines
BATANGAS STATE UNIVERSITY

BatStateU Alangilan
Alangilan, Batangas City
College of Engineering, Architecture and Fine Arts
https://batstate-u.edu.ph/, Tel. No. (043) 425-0139 loc. 118/2121
Chemical and Food Engineering Department
Mentoy,Jan Jericho C.
ChE-2204
GENERAL DIRECTIONS:
1. Answer all problem-solving type problems in a clean paper, preferably white.
2. Avoid rounding off during computations but only on final answers, up to four (4) decimal places.
3. Upload your .pdf file with complete solution at the end of the Google Form. It must be named as <Section-Name-Q2>.
Example: 2201-de Guzman, Monroe-Q2.pdf
I. True or False (1 pt. each)

Choose True if the statement is correct, otherwise False.
1. If all individual B/C ratios of MEAs are less than 1.00, then the preferred option is to “Do Nothing”.True
2. The concept of individual projects stems from the B/C ratio each project has to offer. Once it is feasible (i.e., >
1), MEAs are born.True
3. Replacement analysis should be done at the end of the useful life of the property.False
4. If there is a past estimation error, there is a need to replace the property immediately..False
5. The physical life is always greater than all the other “life” factors under replacement analysis.True
6. If breakeven analysis is conducted with PW analysis for different MEAs, it doesn’t guarantee that the fastest
alternative to reach its breakeven point has also the highest equivalent worth.True.
7. In depreciation analysis, the method that will yield the highest book value at the end of n years is always the top
factor to consider..False
8. Replacement ends depreciation.True
9. If a property’s market value becomes 0, the owner has no right to sell it at a value > 0 since this will be taxable at a
very large rate.True
10. Any net income obtained from selling a depreciated property according to its last market value is considered a
capital gain.True
II. Problem Solving
1. (20 pts.) An investment worth P203,000,000 is made from a certain transaction of a supposed
philanthropist. The salvage value at the end of its useful life of 15 years is P200,000.
DEPRECIATION Other
BV1 BV2 BV7 BV10
METHODS Unknowns
SL Method 15 =
DB Method R=
SF Method SF factor =
( = 6.8%)
SOYD Method N=
the methods of depreciation, complete the table below.
DEPRECIATION Other
BV1 BV2 BV7 BV10
METHODS Unknowns
SL Method d15 =P 13,532,000 P 189,468,000 P 175,936,000 P 108,276,000 P 67,680,000
DB Method R = 2/15 P 175,933,333.3333 P 152,475,555.5556 P 74,552,238.9450 P 48,530,746.3592
SF Method SF factor = P 194,287,151.4699 P 185,051,532.0279 P 129,865,763.9702 P 88,157,730.1602

0.04296276396
(i = 6.8%)
SOYD Method N =120 P 177,650,000 P 153,990,000 P 61,040,000 P 25,550,000
 SL METHOD
BatStateU Alangilan
d15= B-SV = P203,000,000 - P200,000. = P 13,532,000

N 15
BV1=B- B-SV(k) = P 203,000,000 - P 13,532,000 (1) . = P 189,468,000

N
BV2=B- B-SV(k) = P 203,000,000 - P 13,532,000 (2) . = P 175,936,000

N
BV7=B- B-SV(k) = P 203,000,000 - P 13,532,000 (7) . = P 108,276,000

N
BV10=B- B-SV(k) = P 203,000,000 - P 13,532,000 (10) . = P 67,680,000

N
 DB METHOD (200% method)
R= 2/N = 2/15
BV1=B(1-R)k = P 203,000,000 (1-(2/15))1. = P 175,933,333.3333
BV2=B(1-R)k = P 203,000,000 (1-(2/15))2. = P 152,475,555.5556
BV7=B(1-R)k = P 203,000,000 (1-(2/15))7. = P 74,552,238.9450
BV10=B- B-SV(k) =B(1-R)k = P 203,000,000 (1-(2/15))10. = P 48,530,746.3592
 SF METHOD(i=6%.)
SF FACTOR=( 0.06 ) =0.04296276396

(1+0.06)15 -1
dk= 202,800,000(0.04296276396) = 8,712,848.53013741
BV1= 203,000,000-(dk((1+i)k-1)) = 203,000,000-(8,712,848.53013741((1+0.06)1-1) ) = P194,287,151.4698630

i 0.06
BV1=P194,287,151.4699
BV2=203,000,000-dk((1+i)k-1) =203,000,000- 8,712,848.53013741((1+0.06)2-1) = P 185,051,532.0279170

i 0.06
BV2= P 185,051,532.0279
BV7=203,000,000-dk((1+i)k-1) = 203,000,000-8,712,848.53013741((1+0.06)7-1) = P 129,865,763.970240

i 0.06
BV7=P 129,865,763.9702
BV10=203,000,000-dk((1+i)k-1) = 203,000,000-8,712,848.53013741((1+0.06)7-1) = P 88,157,730.16023390

i 0.06
BV10= P 88,157,730.1602
 SOYD METHOD
N=1+2+3+4…..+15 = 120
BV1= 203,000,000-202,800,000(kn/N) = 203,000,000-202,800,000((15)/120) = P 177,650,000

BatStateU Alangilan
BV2=203,000,000-202,800,000(kn/N) = 203,000,000-202,800,000((15+14)/120) = P 153,990,000
BV7=203,000,000-202,800,000(kn/N) = 203,000,000-202,800,000((15+14+13+12+11+10+9)/120) = P 61,040,000
BV10=203,000,000-202,800,000(kn/N) = 203,000,000-202,800,000((15+14+13+12+11+10+9+8+7+6)/120) = P 25,550,000
2. (20 pts.) During your stay in your first job as a chemical engineer, the finance team wasn’t around for some
reason and the CEO wanted a depreciation plan right away. There was no one out there knowledgeable in
mathematics ang engineering economy other than you so you had to provide the depreciation plan. The task
from the email goes like this:
“ <April 1, 2022 | 07:48 AM>
Dear Engineer,
Sorry for the urgency, but I need to have a depreciation plan for our current economic stand. Our
assets amount to P11,237,188,000. You need to show me how these assets will depreciate starting
from 2023 (next year) until 2045 using any method of preference until the last book value at year 2045
amounts to P100,000,000. You can set the interest at the current MARR = 10% whenever needed.
Among the deprecation plans you have prepared; you need to select the best plan so that our assets
will still get the HIGHEST book value at the end of 17 years. You know, I had to retire at this year, so I
want to leave the best assets as much as possible.
Thank you. Your promotion is pending until you finish this task.
Original Cost 11,237,188,000

Residual Value 100,000,000
Useful life 22
Annual Depreciation expense
(Original Cost-Residual Value) 506,235,818.18182
Useful Life
Annual
Accumulated
Period Book Value Depreciation Book Value In Ending Year
Depreciation Expenses
Expenses
1 11,237,188,000.00000 506,235,818.18182 506,235,818.18182 10,730,952,181.81820
2 10,730,952,181.81820 506,235,818.18182 1,012,471,636.36364 10,224,716,363.63640
3 10,224,716,363.63640 506,235,818.18182 1,518,707,454.54545 9,718,480,545.45455
4 9,718,480,545.45455 506,235,818.18182 2,024,943,272.72727 9,212,244,727.27273
5 9,212,244,727.27273 506,235,818.18182 2,531,179,090.90909 8,706,008,909.09091
6 8,706,008,909.09091 506,235,818.18182 3,037,414,909.09091 8,199,773,090.90909
7 8,199,773,090.90909 506,235,818.18182 3,543,650,727.27273 7,693,537,272.72727
8 7,693,537,272.72727 506,235,818.18182 4,049,886,545.45455 7,187,301,454.54546
9 7,187,301,454.54546 506,235,818.18182 4,556,122,363.63636 6,681,065,636.36364
10 6,681,065,636.36364 506,235,818.18182 5,062,358,181.81818 6,174,829,818.18182
11 6,174,829,818.18182 506,235,818.18182 5,568,594,000.00000 5,668,594,000.00000
12 5,668,594,000.00000 506,235,818.18182 6,074,829,818.18182 5,162,358,181.81818
13 5,162,358,181.81818 506,235,818.18182 6,581,065,636.36364 4,656,122,363.63637
14 4,656,122,363.63637 506,235,818.18182 7,087,301,454.54545 4,149,886,545.45455
15 4,149,886,545.45455 506,235,818.18182 7,593,537,272.72727 3,643,650,727.27273
16 3,643,650,727.27273 506,235,818.18182 8,099,773,090.90909 3,137,414,909.09091
17 3,137,414,909.09091 506,235,818.18182 8,606,008,909.09091 2,631,179,090.90909
18 2,631,179,090.90909 506,235,818.18182 9,112,244,727.27273 2,124,943,272.72728
19 2,124,943,272.72728 506,235,818.18182 9,618,480,545.45454 1,618,707,454.54546
20 1,618,707,454.54546 506,235,818.18182 10,124,716,363.63640 1,112,471,636.36364
21 1,112,471,636.36364 506,235,818.18182 10,630,952,181.81820 606,235,818.18182
22 606,235,818.18182 506,235,818.18182 11,137,188,000.00000 100,000,000.00000
BatStateU Alangilan
Determine the interest rate
100,000,000=11,237,188,000(1-I)22
22
√(100,000,000) = 22√(1-I)22
11,237,188,000
0.806841613 - 1 =i
i=0.193158387
I=0.1932
A= P(1-i)17
= 11,237,188,000 (1-0.1932)17
A = P 506,235,818.18182
A= P 506,235,818.1818
3. (40 pts.) Mr. Decision is torn between two independent projects A and B. The data below each project are
given and the MEAs under each project are also given. Take MARR = 12% for all projects.
A. Perform the proper evaluation of all the projects available.
B. Recommend the project(s) that can be selected from the list so you can help Mr. Decision to decide.
C. Explain the method(s) of evaluation you used including the assumption(s) made.
PARAMETERS MEA 1 MEA 2 MEA 3 MEA 4

Investment Cost 1,500,000 1,000,000 2,000,000 2,500,000
Annual Service Benefit 200,000 200,000 150,000 115,000
PROJECT A
Annual Insurance Benefit 300,000 0 150,000 200,000

Annual Maintenance and
120,000 100,000 500,000 200,000
Operational Costs
Annual Revenues 90,000 100,000 110,000 90,000
Market Value 100,000 90,000 0 200,000
Useful Life, years 10 8 5 4
PARAMETERS MEA 5 MEA 6 MEA 7 MEA 8
Investment Cost 100,000 200,000 300,000 500,000
Annual Service Benefit 10,000 10,000 15,000 11,000
PROJECT B
Annual Insurance Benefit 30,000 16,000 0 10,000

Annual Maintenance and
50,000 60,000 40,000 90,000
Operational Costs
Annual Revenues 90,000 100,000 110,000 90,000
Market Value 9,000 6,000 10,000 15,000
Useful Life, years 6 6 6 6
BatStateU Alangilan
SOLUTION(MARR=12 %)
PROJECT A
Useful Annual Cash Annual Cash Salvage

MEA 1 Net Cash Flow PV Factor PW
Life Inflow Outflow Value
0 -1,500,000.00 -1,500,000.00 1 -1,500,000.00000
1 590,000.00 120,000.00 470,000.00 0.89285714286 419,642.85714
2 590,000.00 120,000.00 470,000.00 0.79719387755 374,681.12245
3 590,000.00 120,000.00 470,000.00 0.71178024781 334,536.71647
4 590,000.00 120,000.00 470,000.00 0.63551807840 298,693.49685
5 590,000.00 120,000.00 470,000.00 0.56742685572 266,690.62219
6 590,000.00 120,000.00 470,000.00 0.50663112118 238,116.62695
7 590,000.00 120,000.00 470,000.00 0.45234921534 212,604.13121
8 590,000.00 120,000.00 470,000.00 0.40388322798 189,825.11715
9 590,000.00 120,000.00 470,000.00 0.36061002498 169,486.71174
10 590,000.00 120,000.00 100,000.00 570,000.00 0.32197323659 183,524.74486
TOTAL PW 1,187,802.14701
TOTAL PVAF 5.65022302841
AW( TOTAL
210,222.17018
PW/PVAF)
BatStateU Alangilan
Useful Annual Cash Annual Cash Salvage

MEA 2 Net Cash Flow PV Factor PW
Life Inflow Outflow Value
0 -1,000,000.00 -1,000,000.00 1 -1,000,000.00000
1 300,000.00 100,000.00 200,000.00 0.892857143 178,571.42857
2 300,000.00 100,000.00 200,000.00 0.797193878 159,438.77551
3 300,000.00 100,000.00 200,000.00 0.711780248 142,356.04956
4 300,000.00 100,000.00 200,000.00 0.635518078 127,103.61568
5 300,000.00 100,000.00 200,000.00 0.567426856 113,485.37114
6 300,000.00 100,000.00 200,000.00 0.506631121 101,326.22424
7 300,000.00 100,000.00 200,000.00 0.452349215 90,469.84307
8 300,000.00 100,000.00 90,000.00 290,000.00 0.403883228 117,126.13611
TOTAL PW 29,877.44389
TOTAL PVAF 4.967639767
AW( TOTAL
6,014.41435
PW/PVAF)
Useful Annual Cash Annual Cash Salvage Net Cash

MEA 3 PV Factor PW
Life Inflow Outflow Value Flow
0 -2,000,000.00 1 -2,000,000.00
1 410,000.00 500,000.00 -90,000.00 0.892857143 -80,357.14286
2 410,000.00 500,000.00 -90,000.00 0.797193878 -71,747.44898
3 410,000.00 500,000.00 -90,000.00 0.711780248 -64,060.22230
4 410,000.00 500,000.00 -90,000.00 0.635518078 -57,196.62706
5 410,000.00 500,000.00 0 -90,000.00 0.567426856 -51,068.41701
TOTAL PW -2,324,429.85821
AW( TOTAL
-644,819.4639
PW/PVAF)
BatStateU Alangilan

MEA 4 PV Factor PW
0 -2,500,000.00 1 -2,500,000.00
1 405,000.00 200,000.00 205,000.00 0.892857143 183,035.71429
2 405,000.00 200,000.00 205,000.00 0.797193878 163,424.74490
3 405,000.00 200,000.00 205,000.00 0.711780248 145,914.95080
4 405,000.00 200,000.00 200,000.00 405,000.00 0.635518078 257,384.82175
TOTAL PW -1,750,239.76826
AW( TOTAL
-576,239.20350
PW/PVAF)
PROJECT B

MEA 5 PV Factor PW
0 -100,000.00 1 -100,000.00
1 130,000.00 50,000.00 80,000.00 0.892857143 71,428.57143
2 130,000.00 50,000.00 80,000.00 0.797193878 63,775.51020
3 130,000.00 50,000.00 80,000.00 0.711780248 56,942.41983
4 130,000.00 50,000.00 80,000.00 0.635518078 50,841.44627
5 130,000.00 50,000.00 80,000.00 0.567426856 45,394.14846
6 130,000.00 50,000.00 9,000.00 89,000.00 0.506631121 45,090.16978
TOTAL PW 233,472.26597
AW( TOTAL
56,786.45962
PW/PVAF)
BatStateU Alangilan

MEA 6 PV Factor PW
0 -200,000.00 1 -200,000.00
1 126,000.00 60,000.00 66,000.00 0.892857143 58,928.57143
2 126,000.00 60,000.00 66,000.00 0.797193878 52,614.79592
3 126,000.00 60,000.00 66,000.00 0.711780248 46,977.49636
4 126,000.00 60,000.00 66,000.00 0.635518078 41,944.19317
5 126,000.00 60,000.00 66,000.00 0.567426856 37,450.17248
6 126,000.00 60,000.00 6,000.00 72,000.00 0.506631121 36,477.44072
TOTAL PW 74,392.67008
AW( TOTAL
18,094.21063
PW/PVAF)

MEA 7 PV Factor PW
0 -300,000.00 1 -300,000.00
1 125,000.00 40,000.00 85,000.00 0.892857143 75,892.85714
2 125,000.00 40,000.00 85,000.00 0.797193878 67,761.47959
3 125,000.00 40,000.00 85,000.00 0.711780248 60,501.32106
4 125,000.00 40,000.00 85,000.00 0.635518078 54,019.03666
5 125,000.00 40,000.00 85,000.00 0.567426856 48,231.28274
6 125,000.00 40,000.00 10,000.00 95,000.00 0.506631121 48,129.95651
TOTAL PW 54,535.93371
AW( TOTAL
13,264.54166
PW/PVAF)
BatStateU Alangilan

MEA 8 PV Factor PW
0 -500,000.00 1 -500,000.00
1 111,000.00 90,000.00 21,000.00 0.892857143 18,750.00000
2 111,000.00 90,000.00 21,000.00 0.797193878 16,741.07143
3 111,000.00 90,000.00 21,000.00 0.711780248 14,947.38520
4 111,000.00 90,000.00 21,000.00 0.635518078 13,345.87965
5 111,000.00 90,000.00 21,000.00 0.567426856 11,915.96397
6 111,000.00 90,000.00 15,000.00 36,000.00 0.506631121 18,238.72036
TOTAL PW -406,060.97939
AW( TOTAL
-98,764.47344
PW/PVAF)
PROJECT A
MEA 1
PW: 1,187,802.14701
AW: 210,222.17018
MEA 2
PW: 29,877.44389
AW: 6,014.41435
MEA 3
PW: -2,324,429.85821
AW: -644,819.4639
MEA 4
PW: -1,750,239.76826
AW: -576,239.20350
BatStateU Alangilan
MEA 5
PW: 233,472.26597
AW: 56,786.45962
MEA 6
PW: 74,392.67008
AW: 18,094.21063
MEA 7
PW: 54,535.93371
AW: 13,264.54166
MEA 8
PW: -406,060.97939
AW: -98,764.47344
In terms of Present Worth , MEA 1 has the highest value therefore Project 1 should be selected. In terms of Annual Worth, MEA 1 has
the highest value overall Project 1 should be selected. Overall, in terms of Present and Annual Worth, MEA 1 having both the highest
value and being a part of Project 1, therefore Project 1 should be selected.
BatStateU Alangilan
BatStateU Alangilan
BatStateU Alangilan
BatStateU Alangilan
BatStateU Alangilan
BatStateU Alangilan
BatStateU Alangilan
Prepared by:
Engr. Monroe H. de Guzman, AAE

Lecturer, Engg 404
Noted by:
Mary Rose F. Persincula, ASEAN Eng.

ChE-FE Department Head
Approved by:
Dr. Reynato A. GamboaDean,

CEAFA

Quiz II - Engg 404 - 2022

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Republic of the Philippines

BATANGAS STATE UNIVERSITY

I. True or False (1 pt. each)

II. Problem Solving

the methods of depreciation, complete the table below.

DB Method R = 2/15 P 175,933,333.3333 P 152,475,555.5556 P 74,552,238.9450 P 48,530,746.3592

SF Method SF factor = P 194,287,151.4699 P 185,051,532.0279 P 129,865,763.9702 P 88,157,730.1602

d15= B-SV = P203,000,000 - P200,000. = P 13,532,000

BV1=B- B-SV(k) = P 203,000,000 - P 13,532,000 (1) . = P 189,468,000

BV2=B- B-SV(k) = P 203,000,000 - P 13,532,000 (2) . = P 175,936,000

BV7=B- B-SV(k) = P 203,000,000 - P 13,532,000 (7) . = P 108,276,000

BV10=B- B-SV(k) = P 203,000,000 - P 13,532,000 (10) . = P 67,680,000

 DB METHOD (200% method)

BV1=B(1-R)k = P 203,000,000 (1-(2/15))1. = P 175,933,333.3333

BV2=B(1-R)k = P 203,000,000 (1-(2/15))2. = P 152,475,555.5556

BV7=B(1-R)k = P 203,000,000 (1-(2/15))7. = P 74,552,238.9450

BV10=B- B-SV(k) =B(1-R)k = P 203,000,000 (1-(2/15))10. = P 48,530,746.3592

SF FACTOR=( 0.06 ) =0.04296276396

dk= 202,800,000(0.04296276396) = 8,712,848.53013741

BV1= 203,000,000-(dk((1+i)k-1)) = 203,000,000-(8,712,848.53013741((1+0.06)1-1) ) = P194,287,151.4698630

BV2=203,000,000-dk((1+i)k-1) =203,000,000- 8,712,848.53013741((1+0.06)2-1) = P 185,051,532.0279170

BV7=203,000,000-dk((1+i)k-1) = 203,000,000-8,712,848.53013741((1+0.06)7-1) = P 129,865,763.970240

BV10=203,000,000-dk((1+i)k-1) = 203,000,000-8,712,848.53013741((1+0.06)7-1) = P 88,157,730.16023390

BV1= 203,000,000-202,800,000(kn/N) = 203,000,000-202,800,000((15)/120) = P 177,650,000

Original Cost 11,237,188,000

Determine the interest rate

PARAMETERS MEA 1 MEA 2 MEA 3 MEA 4

Annual Insurance Benefit 300,000 0 150,000 200,000

Annual Insurance Benefit 30,000 16,000 0 10,000

Useful Annual Cash Annual Cash Salvage

Useful Annual Cash Annual Cash Salvage

Useful Annual Cash Annual Cash Salvage Net Cash

Useful Annual Cash Annual Cash Salvage Net Cash

Useful Annual Cash Annual Cash Salvage Net Cash

Useful Annual Cash Annual Cash Salvage Net Cash

Useful Annual Cash Annual Cash Salvage Net Cash

Useful Annual Cash Annual Cash Salvage Net Cash

Engr. Monroe H. de Guzman, AAE

Mary Rose F. Persincula, ASEAN Eng.

Dr. Reynato A. GamboaDean,

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