TwmvANNWeRY fi Sareea INSTITUTE OF ENGINEERING =| Level BE Pull Marks | 99 Examination Control Division | Pevpramme [cy Ca FEM na sts |p 2079 Ashwin hi Lece/iot Lisi” lime [Sin | ‘Subject - Engineering Economies (é 68) Yunis er requiced iether anes nthe oom word fir a8 practicable & Altemp Alt questions YP fswesin he margin inate Eel Maks Aste suitable deta necessere 5 Explain the roe of engineers in decison making in invent 2. 8) Explain differen formtlae " * Wes of standard cash fy with their economic equivslnce oy % 9) Find both pes of Bi rao ssing AW fommulon fom the following cash Now of si mpage = RS. 5.0000, Revene = Re Soe ee yest and Mee BY 15.000 cach yar art, Exons 0 "he frst yeu Meni’ By 3% och yea afer tat Salagh seis at MARR» 8%, © @ ©) Esplin drawbacks oF1RR wi slate expe, io} 4 9) ee Zpecabiliy esumption tose the bes jet fom the following three )+) Conieyan inven rit the csh fae gate of eh epee 5 yeas forever shown. At an intrest ate of 14%, amount ofthis project. empath capitalized equivalent 1) Find econamic sevice life fom the fllowing infomation: «Initia Cost ~ Rs 25,000 ‘Operation cost ™ Rs 10,000 for 1 yer Salvage value = Rs 10,000 for thefts year ‘Useful life = 6 years SMARR = 12% 1b). What do you mean by replacement analyst Wt do etn flowing information fom AEC eppronch when and increase by 15% theeafe vant desrease Rs 1000 each year Determine the choice beoween defeier lite is 5 eats end MARR ie oan ‘ged vextent BS 3000000 aru Cosi (Rs) | 00 75000 Savage vale Re 300000) 6, 8) Explain wit abl Earmpes he aint of Breleeke ‘Analysis in ease of single fend rautually exclusive alternatives (Over a range of 15% with 5% fnerenent with by) Perform a sensitivity analysis fe partes () Usef li Gi Inia Teng net worth macthod (FW fermelation) for using ee Net Revenues tis en tht 1 = R009 Sv = Rs 22,000 in es 4.00 a fist ya ten reas By 19% exch Yeat 1 Usaha fe = 6 years and MARR = 15% eeeat bch ofthe considered parameter ofthe proj 72'S sensitive and why? lot sensitivity eraph sls ) How seenato sly can be performed? xin f with uit 7, a) You purchased a machine ata cost os 3,20,000 and itis classed as a 3 years reply, Te deprecation ison MACRS shes "Th estimated anual revende 10 Frrerted by machine Rs 150,000 an Ope find Maintenance cost is Rs ve Boo Deven the afer tax present woth i MARR is 15% and Tax rate applicable is 30% 1) Write down te reasons Fr dep out CP, Ts doubles the money in 5 yeas. What nese te the real (inflaton fee) interest ale? te examples. reciation end method of charging deprecation. 18, Whats inflation? Deseribe a You deposit Rs 10,000 in a scheme 1 Joe geri? Iie ination ates 7% ws 4 o) @ Assy Examination Control Division anv INSTITUTE OF ENGINEERING 2079 Jeti 8) Calculate both RR. ‘Soest th fealty ef tacpe, ome et E MARR © Recmed s bat i , et oan eo enn 5 frm dine = tartan seen} ‘Amul Reverses G2 7 [Salvage Wate a) Soon by Recommend he esomnenl he bt po ig comin nnd i 5. Differentiate between cation seprooh ead opportunity cost approach wed in Placement amis A ain bt fe ‘annually. The operation and ost of $5000, Hs market valued poate beget sel ile 2 Sa a The ns MARI Is Fad Ge winioum BUAC So roe its economic service life if useful fife is 7 ycars, mn DUAL he ation oad 8 tn6. Explain different methods of analyzing the riskiness of the project. Perform sensitiv ‘nlysis to identify the most sensitive parameter by plotting sensitivity graph, ‘conveational BCR for a project having following, information over the range of 215% 1 (Gnith increment of 594) for the pararagters (Initial Investment (i) Net Anaual Revenues i etre Rate, 25) {(tnitiatiawestment GBs) [15000 ‘Net Anal Revennes GE) [aco — \ Salvages Value fs) 35 Lite of yest Wea) | 1 ‘MARR 10s per year 1. "Use the esusiotent vis ! i : MACRS method. A Principles of engineering con tt "Make uncer 1. Describe the procedure of deprecation calulation using fia in Pa econ yep " considering the following investment project. (48) at he tne ve of ; Expl these to ey j Year oT pepe ers] Beeps SE, MOM ong wi ake os A ilfcctate nom 5 Re DICE Gaihowandsy | =1000 | S00 | 340 | 28s | 700 [TON wameee Rs 25,06 tipo ele iets aes “The suivage value at the end of 5" year will be Rs 0. Double deci lance method of the 1 ne bss me ob tee Pastner faved , yet Te eat ote Will be used for depreciation estimalion. Thé rate of income eqites a 10% after tax rao of return, should the pmject Bund , 8. Define different igterest rates usod, in inflation analysis Initial investment = i MARR = 12% end inflaton es Netonnal yvenae { Yer oT 1 a 3 Salvation % | Const: Dollar (Ra) | 9000. | 1500" |' 2000 [2500 are I ott ate ae = cee Aimar MARE ~ 20h ow ge ree ct tcp vere pre Project balenes in grephical as welt ox illo Sears 10% Rabe ‘ : 2 —Sihgesaies Bee ; aR te geach Yer cevine his ofboth defender qd ciao. n 1 extn 4 nevi aa 00 orgs of 15% wi 3 ‘ai AW Beaton sent pest, i) Net ama neon 8) UES TE I) MARE. a (Glen Parameters: Inia cost= Rs 125,000 ‘Salvage waive = R525 : Aseat tients ee oo Re Srolasite= 6 Yeu awl MARK = 8%, ‘hich paramere he net baie anc sive? Ove 7, Prepare a schedule of enareing “aprecinifon and carry out-the-bOBIE 8, What is Actual and 5 for 7 yours. Based on the follosving on over, others and why? Take ©) You are. planning to invest ia «project information, whieh option would you Pl MARR — 11%, Use suitable methodology. Project A Tnvestnent = Rs 100,000 =e 75000, Reveie Be Ties ioyexs | ale = Tyee Wij ttnoornt eae ene a bie allyl. ow So yew tke why venlacemest ansiyais when planning horizon ip finis? “6 ‘valoos aro expected y TRIE! Operation and Maintenance of Re 20,000 pes yooh ag. year Salvage valuc expected atthe end 9 Yea o> aos ons ang at erin Ratan Bi ft al i no ee a fey ay Set go ands 280000 for obval ant are soul he Bn geo atl Py [ste oom aan | SN value: for-enclh year of ‘a machinery having first cost of Rs. "90,000 with salvage value OP RS 10,000 aiter'S years: foing ) DDB tied , : Row method B)MACRS sed so, fat aero et eet a ed on ore eel densi, Ne se fin ae coal aR 35000 oe 59H. 26 Ea MarR 159% Sucoess | His] Probability | 0.2 Tacome [400,000 Coit Doles? TS: cast-f epple eee. i: 150: The: Gost Fie 6%, 8% and 9% peck in Gis year second yeaa thi yeas aigtely, Determine the average inflation rate for 3 yeacs. U Examinat ore eouvay 7 OMENS UIEOF Penang ion Control Division 2078 Poush Cain me och oe inion eb ey ‘tenet diguaione 9 Bet eo woul sau a figures nthe mars mt words far as practi dst ata Ea He, oy ©» ort ga sy sehen tml of ly sly of Un employer ene ma S 1) Decide the fest oft 9) Recommend th best projet from ‘Useia Hifepment Hee ESET nie which will Foe spice ct mci, at cn bed FF OE te ee 0 ar oval ie, Te ey year sada ree Re 1.00 ore eg oe, 00 Fe at at 15100 ft ea ene a, 3000 ue ick NS Sa adie by hve ae eure ve A care i che ena Re 10900 fod woe TAY Se Th age pe Oe arr re ee ectoonae i a, C00 ater one ers ASSES Teen yar for Seam : St sauce fr ech opin a eine when he den Flac MARR 15%: s ! meme ae ven pie ls Jt tre Caen ee ate metre tg peted 250 Sy. pul be ‘Selviage Value. 1b) Enumerate the sources of risk in| ‘erglagering projets.” 1 aman lide Sea rope val Aerie tachi he. Compute ie MACRS % ll dp Fao see foo eur an ae PY tes of 30%, when cs etna sac eof Rs 3000, Aszune, f= 12% per Yet Choos the bt ijet toa the allow alors Tafel rel Tail Cost RS) Salvage Valo | fnnua! © and Mi costtRa_| 6.00 “Asnune an average info Of Sad inet alse 1398p as 1 oF Ri, 90,000 with no savage vai atthe restaton anni for te ass. isa te company bas 1 ray To pooarate revende OF RE, 25,000 per year ott oy wi 1 (oa @ “TRIBKUVAN toy INSTOVTE OF ona Examination ‘ontrol Divi amen eee mss Subject ne “ect - Engineering Beonomics (CB ia sre &, Atenpt A gece 40 Gree exevern he seowecinheironn wend YM fey etn Asso cunap ees alec pe El rs ines J. Explain the pri 2, a) Senn slog 22-9) Seppo tat ing soon ia det wi fs You t in detail with approprite examy Isle dant fan promt nee in caving account which uve 1294 compounded, ‘compounded S yee Monthly forte etc ees Yee, mt three ei. What trout do you espeevat tas Roun a you expect al the ead of i the GhDecdine FSET Tea aes . 2) Eva RR GW formato ns wing linear ah, ‘oc eA / T 10%. Also draw 00] 1a) What are the reas bein other? Explain wk acute aap pve Os - 1) Bases on following informa ect tu Aa ates BAI omen ‘Alematve “1 tidus Eh Teresina HD ime gh Aes) Revenue Rs 5000 [Revenue = Rs 7000 [Reset Rs 15000, Life =5 years . pvenue = Rs 8000, MARR ~ 10%, Reiavestment Rate 12% . ‘Salvage value = 12% of investment and M=Rs 1500 ‘You are. planning 10 invest fo a proist for 7 year, Reformation, which option woul yu prefer over oles Ee a te fang Projet B Tove“ Rs THO [invesinea GOR] nO ers TO [Sevens Re teat gop_|Revenne Re 17000 _ evens RD [ites Tyears___[Eife= Seas Proeatc wy 8 Rs 6 6 2 8 mnae | ‘Tamiuvasuniversmy E ecelcnentanassunde inte plaming orien. S. a) Write down the procedure frseplacemé INSIITUTEOF ENGINEERING — Fist “Reap ~ convact to perform a given. sevice on Which curren 'b) Suppose that the firm has a contract 10 3 Fal Mar | 66 ir Examiuation Control Division Prograname | BCE BEL BEX as warns [32 ‘with ihe following ennual equipment a rogrmme | ner aGe stearate fa BEES 12076 Bhadra Year?Pat[ iit Tie ah, fender ox callengeris cons 2 et = Subject: Bagneeting Bononies C5035 < Sree quotes” i esvenin tei ova word fr ex paca ¥, Ate Al questions ‘The figures in the ndloate Full Marks, Assen rile data frecestry. = a Pres aboeing Eons. Wy aegis cee ipa Deri ae oe in) MARK aid) Useful lie, Dew ; : secre pe Bh iis EES (us3] tivit over. 2 Se i] machine uniform semf-enmual cashflow of i yout, Ao re ane ae artnet = sage Vals | UCR [WARE {itt i124 compounded cet Wit liege ede a (Fisicoa Ara Rex | We [mSyeets_L 1 9 Feast continous punting. Wat iit eae fe cottons fads ate vow omar § 1000 per yx. N= 12 yey M =, 2058 compounding ‘cxizoonly, ie io ry ne hdl of monic mals? Expl a ref ny two then wi eaiubls camp of 2 —s mre ul -+e) cen est Sr ih rs loving aration geting gy . rater ett me yeas, elage ‘Value = Rs 50 ‘gross Revenue ™ Rs 1 Lakh, OM Draw your decision teed St) i 9047) discounted ‘back period Youn trtiod (I) model BC ro med sd (u) Rlahle a ot ‘our are provided with 4 MARR, 3 ys nn ease a Be24343] . 49) san me egg De ling ope say doe se mca ba 1. Te Yan. Assime MARG™ 0% pe yeas Bw i afer ea 8 " Feta Re 10,000 fet 3 seule the Tnyestuent 350,000 500000 . depron i of 30°. at, Beplain deletion nethod of a Ane Reveeut [130,000 [175,000 applicable is 30M, goto ua ait Annual Cos [15,000 | 25 000 je inflation? Explain cost ola Salvage Vale [35,000-[-50, 600 8. Wimuengsnisbecse analy Usefl ife [$year | year amend the best project fo he long ah fo of « maually exshuve rat re nny i Project A B » [aa Hnvestent [24,0000 [35 000 ‘Annual Revenve_| 820,000 [12,0000 ‘Annual Cost 110 ato Salvage Value | 25,000 [3.50.00] full yeas [1Oyeusi sidered in replacement ‘ is replacement analysis? What ftciors should be cons =0 aps Eon to caoh Sv spac ad epprnny cost pp, ©) A so me eat S000, Foe mut ales te expect ra by $2000 each year over the previous year's value, Useful life of the machine is six Oring sons eed $0 dong te Bt yo a expected [Eceoe pet ye their ARR = 12% Det the come eos of the machine. YX) Explain the replacement analysis under infinite planning horizan. 6 8) What are the different tools used in ecortmles to assess the risk of any project? ‘Explain each of them briefly, vty analysis (Over « rnge of (15% with 5% iocement) with ‘ oxi TAR (AW a) cag 2 maces (head Tovestmeat (ii) Revenues. It is gives that,” I= Rs 1,00,000 S, = Rs 22.000 SMEs 12,000 RevemcsRe 4,000 “Useful ife= 6 year end MARR = 10% ‘Scagest wich ofthe considered paremete ofthe projec is more semsitve ad wiiy? ve ‘What is the principle of Risk Adjusied MARR method of evatuating the project's ‘iN? Explain | EAP Eanln the gecrl proce fer fr tc gconeric enya wih stale exemple y Gram depreciation snd book vilue of year using following depreciation febots () Decnng Tasos Meet iC) SOT Mesos Gil) Sinking Prnd ‘Salvage Value [ Useful Life | MARR. Cost Basis $7000 [$2000 "| 5Yees" |. 10% 27st ptt ces fe cei tt Spe bat 1 year fnflation rts fer fst year and sex Yee sre 5% and 8% respectively, Celoulats the ‘verege inflation rate of two years ifthe bate pice ia Rs 100, E 1] 4 {q 4 unuvaviavensry INSTITUTE OF ENGnutRING Examination Control Division 2078 Baishakia Gnas ar requited'o give hei ans in heim Attempt All questions, The wes in he margin indicate Ful Mark Assume suitable data necessary, ‘+ What do you men by engneting economics? List ot the Peinples of Enginering eonomics 043) Define ime value of money. Calculate effective interest when 's semiennaly, quately, monthly & coniauouiy * Jon a ld You depos at pres fr monly daw of Ra 15,000 duoughont 4 ‘yes when interest ates 6% pr years? 4 4 Wash flow ot the end of 1 years Re, 5,00; fi FW using gradient formula taking MARR 7% when; Cth fo increases by 10% avers yeas ay 5 COME IRR and ERR if MARR = 10%, Pepe te ance inveseatbaace 1 wor aaa Scat {0 [$3000 [85000 | $5000 $Sb00| S300 t {Cath tw $io0 | sono ss0o | sietoL S200 Sse 6. Evalue the Discounted Payback prod if MARR i 10%, pov jo Ti taps pe tse Sinton | 0 {$300 | $000} $5000] Sonn s7e0e aw Cash outow [$10000| Sioo0| $500 | $000 [S700 [ Senn foee (Standard Payback periods 4 yea) 7. Which oon would you secommeod? Option | Fist Cost | Annual Benet | Aamal Coa [Sa A sis00_[ sigo0 asp 4 B_[_ssooo | s2s00 | 31300 sio00 |S 2} sine the reps aston ad te FW formant MARR is LO a Uae the co-eminaion asunpton i sty pedis 4 years, MAIL is 138, Select suitable mstod aod Evalue, Which method do you peer snd iy? © & Fepiin (uth stile examples the eonparng mutually exchsve, contingent and independent project in conination, 4 9. Why replacment alysis is neces in engnering economics uy? Discus with an ‘example, 6 and compounding (43) (444) 4 Vane | Use ie $500 yesSalvage vals = Rs, 30000 ‘Option and Maintenance Cost = 30,00) Perform the seplicement analysis using the cashflow approach and opportunity cost spproach, 11, Bxplaia the Decision Toe Analysis with propria lustation, 12. Investigate the Modified BCR (ising FW formulation) ove a range of + 30% i initial investment, wel life and MARR, of the following project. Ina nestment~ $2000 Salvage value ~ $25,000; MARK = 12%; Anu Revenue 30,00; Anal expnses $5 00; Ul it~ 10 yea. Draw also sensitivity diagram and interpret. 13. A texpayer wants to use costing fs, 10,000 ase in business thet assign to S years Tie. Find» ) Depreiaton amount foreach year using staight line and declining balance method faking satvage value Rs 1,500 ') Rote of deprecation and depreciation mount by MACRS guideline ©} After tx cashflow when annual income is RS. 3000 an! business bas to pay 25% ‘corporate ix followed by declining balance deprceation, 14, How do you measure the average inftion rate? Explain with an exaniple. Caleulie IRR (inflation fee) the fllowing eash ow i aflation ei 10% per year. OY | Cash flow in Acinl 750,000 3,20:000 5557.00. 328,000 4 12.90,000) 6, Explain about the decis project over range of £308 ‘tee analysis, Perfonm seas 3% at an interval of 410% in Revenue and (ii) Useful life. Use PW formulation ily [Net Annual Revenue 7 Salvage Value é MARR (6) [Ussiu ite ews) —_—_}- 4 Definoenstant dalla acta elise -apbatl to bya’ bike and:yourbave ‘What isthe inflation free intestate you ate Suppo 0.75% pee month. nite! Investment jason of assets ILarmachine costing of Rs, 1,004 Trt ofthe flowing tent Net Anal is peo) ill 04 _reveayvan univenstey INSTITUTE OF ENGINEERING Examination Control Division 2073 Magh Subject: Bngineeting Bconon Codes re reut % ‘Aten questo, Y The figerer nthe margin indicate Eat Men Assn cube deta reas, to give their answers in their own words as far as practicable. |. "Kaowledge of engineering economies helps indecision making process". Jstly it by ‘he principles of engineering econo, 4) 2 A petson invest a sum of 50,000 in bank at nominal interest rate of 18% for 15 yeas. ‘The compounding is monthly, Find maturity amount of te deposit afer 15 years. Also ‘wiefly explain the impertance of time value of movey. G45} el investment of a projects Rs 10,000 having use lif sequal to 5 years wih 0 salvage value, Annual operation and maintenance east is Rs, 25,000. Annual reveni at fhe year RS. 70,00 ad dere y Rs 5,00 ech yar forth omni yeas. “{osse5} {) Drwy UB dagram {i raha modified BOR using PW formulation, Take salvage vale Rs 10,000 Evaluate discounted payback period Take standard (cut off) payback period 3 yeas 4. 9) Select the bs roposd using ERR (Take o-25% and MARR = 20%) 4) poy Jo a a “as Je : Proposal A | -6000_[ 2400 | 2900 | 2500 [3000 | 3000 | 2450 Proposal 8 | -7000 [1960~|3800_| 3700-3600 [3600 [3300 'b) What do you mean by mutually exclusive, contingent and independeat project? Compete fllowing ees by wg repesaiyasumption when MARR is , 246) Project A B Tail Taveiment(R)_[1,00000 [1.30000 ‘Amen Revene (8s) [15,000 —[4,000 ‘Anal Cosi (Rs) [3,000 [3,000 ‘Useful ie (Year) | 6 a ‘Salvage value (Rs) 5,000 10,000 5, Define sunk cost and economic lie ofan assets, What are the reasons for replacemeat of asset. The Annus! Equivalent cost of defender and challenger are given in table below. ‘What is the best replacement trtegies? Use MARR. = 12% end planning horizon. Li oa 12s a5 16 300_| S100_| S400_| $600_|eo0 16500 "7500 { 6000 | seo [3500 [3650-800 a (Rs)sent worth (0 + 20% i changes in present wor ® ying cashflow diagram. Plot change Po value =O 9) Conds he loin i Aare saa cad 30% for the projet mW ieee! ee ees rear Seas ge reese ae a wee iie a spelen 4s] 4) SOWD method 1) Sain ind tos life MARR. Cost basis Salvage value $8000 $2000 ene 8 +b) Explain about the inethod of *MACRS'" deprecation. oT eis Wh ow eve Pl ao ab wen ke oe Dei ian Wi a eo ata 6x00 overt petal yexm {Ie} 04 emuvavinaveary INSTITUTE OF ENGINEERING ered Examination Control Division 2072 Ashwin = Sibeet - Engineering Economics i 659) ¥, Candidates are required to ve tira ini own wore str cspa ~ Attempt All questions, 7 ers » The figures inthe margin indicare Astume suitable data ifnecessary, able Espn why the subjet of eninecing economic i imporunt to Cl Engineer, ‘Whats lifeence between nominal and effete interest nts? You deposit Rs 1200 in your bank account. If the bank pays 4% simple interest, how ‘much will you accumulate in your aczount afer 10 years? What if the bank pays Sommpound interest? How much of you eaungs will be interest ou nterety eq 3. 8) Coleulate IRR from the follo Si oan ea investment balance diagram. (6) Year ofifats~ays Cash low | 3001 250 | 300 a0 aso} aor jee wit following details. MARR ~ 12% io} Annual Cost [Useful ife_| Salvage Value Rs, 3000 at the] 12 years 125000 nd of frst year and increase by Rs. 00 per year roject by ERR method. Take MARR = 10% and e = 20% 0 fy 27 3 ays 6 54,000 136205 3i,000_| 75,000 4000 '38,000-] 38,000. 20,500 39,000[ 32,400} Project by modlfed BCR . Take Salvage Vale of cach project = 10% of Fist Cost io] Cost | Annual Benefits Asnwal © & M Costs | Useful Life | ‘Rs. 400,000 |~ Rs. 175,000 [6 years | ‘B_~[ Rs.7,00,000-| Rs. 350,000 Byears— | 5: 9) An cvistng machine has markt value of Rs 1000 and devas by Ra 2000 per year. Is operating cost is, 2500 in year 1 ond increases by 20% each year for 4 Years. New machine costs Rs. 20000 now and its market valve el Rs. 20% per year for 4 yeas. Operating coats RSS in st yon 30% cach year. Calelate equivalent uniform annual cost of bathe s. MARR = 15%, Formulate the best replacemeat ‘machine for four years only b) Define mutually exchasive ‘proper combinations, 4 ‘Antal Ipeome PRs. 20000 at he lend of fst year ad increase by 52% per year 4) Select te best ~ [tov PROMECTA PROJECT B Cproecre 1) 23,000 39,200 $0,500 30,2007 38,000 40,000. 3,000 38,000 39,000 )-Co-terminating both projet at 5 years and selec the best (using AW formulation MARR = 1594 isting and new strategy if we need the laste Project, independent project and contigent project with a4 ruttuvax navensiry INSTITUTE OF ENGINEERING - z = Examination Control Division 6. a) A company produces an electrons timing switch that fs:use in consumer and ear ” Como producs made by sera thet manufacturing firms. The fined cos nd sh tol costae Re 40,000 and Rs. 85,00 respectively The fetal sles are Rs. 105,000, ~ and ales volume is 15,000 for this situation. . 4 i) Find the treakoven points in terms of mumber of units ii) Whnt should be dhe ouput ithe profit desired is Rs, 50,000? [hed Tae Sabet Candidates ; a frees tei nes ong et Gb wes ni nwa pocaa The ethene indeae b) Draw sensitivity chart using PW formulation ofthe following cash informations tis Assume sutable da Elk ars desired to evaluate the sensitivity of PW to £30% changes on: 8) Mable data if necessary, 7 Interest ii) Investment 2 Say “pine general procedure for after ax goonnmic analysis with stable example, [4] 4) Conideting the following information, compute the annual depreiaton ané book value of-etch year by () SE. method (i) DB method Gii) SOYD method:and (wv) 20) - oie eenare a son acy 3.9) Wii MARR? Bn Ge erat denon 7 o z "Gost basis | Salvage Value | Ueehitoe | MARE 8) Cth toca pojet ara ells: Take MARE= 10% : $7000 | $2000 | Syews [10% POY: 7 2 Z 3 = TF ays 3. Choose the best project from the following alternatives. i ‘inflow * 7 est pro > “Machine [Machine ~ | Cash o 500,000 | $60,000 | 620,000 —| 686,000 | 740,000 — nee “as — astaten| aa cio | TOO oan | TONGA | Tap] seat STAT Fis ute Ae 1 Baleastea bye aybeck pred Satna para easy 12] Salvage Value z0900_| 300000 5 Brahat IRRCPW frm) rng Haarnepoltin nd prepare UD bck _________ Aa operating and’maiatenance ast | 300000250000 able & dagen, Geet average inflation of5% fr the nex! ve years and nies re 15% / yea. _Ephin he frciandeonoie an GI oe 4, 8) Choose the best project among these allertives wing IRR, if MARR = 12% and oe study period 10 years, - { [Pigjet TA —T3 [> JE] [First Cos Re, (2000 1s00 [000 [3000 | Amun ReventeR [390 [276 [525 [30 by Determine both types of BIC rao for the given projet if interest at Investment = 10000 ‘Annual benefit= 4600, ‘Ansoul cost = 3000 Salvage value= 2500 Life of oroiect “8 years a5 «) Balin the equce eumtion and decision Ramevork fr sepleemet cls arequred sarc fs ong P me i used for another 6 Oa 1) An old machine can sell it now for $5,000. If repaired now, can be ae ? Ser wl suo an made $1200 for veal rea Kw openble ‘Soon muir aes ate expe sine 23% ouch 3 Ove ‘previous year's vale. Operating costs are estimated at $2,000 during the fist year an fhe ne cupeaed to eee by $1300 peruse. Dternine eeoonie eicelrcalis maine” | 6, Pera sensitivity analy by FRR using FW formulation (vith increment of 19%) over | © Siigeuttine bi )uetl ie wa) MARR Take MARR 1006 j [Bose [reel sata Vso | Us ile Benefit | a Rs.3,00,000 | s.1,50,000 [625.00 [10% of Fit] 10 years Con 7 a) What are the purpose of depreciation calculation? Compute the anual deprecition allowances and the resting book value using the double declining balance method oy Wilh Switoh overt seaght line method. Cost of asset Rs 10,000, Useful i= 5 | years, Salvage Vale = 20,000. a ') A machin is expected fo cost Rs. 5,00,000 and will generate revenve of Rs 1,50,000 — per year for five years, Its salvage value is Rs 2,00,000. Celoulte afer tax cash flow } snd comespondig NPV if tax ete i 30% and depreciation ison sum of year digit inethod. MARR = 15% = xplsn. any sve" reasons for inflation and compute-the- equivalent: “deflation method. : tort sing I BOY o 4 2 3. 4 s Castinfiow | - 5,90,000. | 5,60,000 | ,20,000 | 6,80,000~ | 7.40,000: i) wy oT (+5) 6 [ay cash eittiow | -10,00,000 | 1,00,000 -|2.00,000 [3.00.00 | 4,00.000 | s,00,000 Given cashflow are in Actual Dollars. Take f= 5% and i= 10% cy Examination 207 YY Candiates are required to gh The figures inthe megin Asie she de Vac Cec, Whit i nonin Projens, IBV AN UREVERSry — saversiry INSTITUTE OF ENGINEERING Control Division 1 Bhadea Pgs | BOS TE Sorina [it — Subject Engineering Feone thir answers inti x, BCT im words as fr os pratcable, a and fective imerest fe? Evaluate PW et he end of 15 years with 10% incest rte compounded moni eh ; ea for ist 10d ORY of cash Now of Rs 50,00 a he begining of cach Define TRR. Find IRR and ERR of tho fllowing project MARR «= 15%, + a) Use Repeatability assumption to select var Testa] center se faie arhar an ; Nien [it vee aol Anna Bent [Esa OM Cor Ee [oaMcer fSatage Vater 1500 a the best project ffom the following three Project x c nial Investment | T0000 |-Zo0000”| 250060 [Annual ExpenainuieI” 25000 [~20000- [1000 Usefil Lie, Yeas [3 [5] 7 Salva Value | -@0000_| 000 [enon MAKR. = 14% +) Explain about the Sunk Cost, Eoonomic life and reasons for replacement of an asset The Annual Equivalet Cost of defender and challenger ee given inthe table below, ‘What is the best replccement stategy? Use MARR = 10% The planning hocizon of the project ic 8 years, ABO | 3408 | 0 a 1 [3 (ABS). | 7700-[ @200- Sas ye sor afar] [sm] a Bs) bs} io] (4) 4) io} 4]ia iat 2 rss inven ucsng ntaig e aeae «nea ras mata ioc si a ed a Eo Eoin Por manent carbo ‘Ranaad Tavestnent Sales income ‘Altematives Se sacar | RAE] Se | monoo | wens | Repenp 03 | oe) TighSaces—{ Foilly=02 | tp al lvestnet and) MAR wing fomultion. Assne SV seasivity gram lo. se sncan by deprecation? plan about the. 1 gta ene et ? SRE eater = sch year b ‘balance method wh fepreciation deh yearby using dling “8! efi ‘Constant dollar-amount and. Actual dollar. amount: Sas 0000 foo bak 1 aya kd you te promised copy Rs. $500 pt on een. oe be natin ewes rac you se suppove py Have Fpllation rte is 0.75% per month? of it:Explain about eny -esthine purchased 6 3) 1646] bs) 4 Taauvase univ INSTITUTE OF ENGINEERING Examination Control Division 2071 Mah 4, Candidates a etn ge er nsuen Y Alterpt AN questions = fia eee The gees inthe mrgn nde Fat Y Assume suitable deta necestary + 9) List out the priscps of egiceting economy, 6 +) Explain he cash ow diagram, ae 6 © Pha Ca $0000 SV =O oFFt one hepato m= EOY [ta 3 as (ecermarmaaanae [30G0 1 000—| 000 [-a9000—[ 80 | Evaluate the PW by defection method, if inflation fre interest rate = 1%, 4} ‘What wil be the amount at the end of 10 yeas if you deposit Rs, $000 per month for five years continuously ifnominl interest miss 10% compounded quacedy? o b) Find the value of X from the following figure, i= 10% 8 3. Caleulats bot ypes of BCK using FW focsuson viien «8 ‘+ luitial investments Rs, $0000; ‘+ Tcome is Rs, 10000 al the end of fist year and inreasng by 10% pe yea, Annual expenditures Rs. 2000 athe end of frst year and inereasing by Re. 200 per year, Useful life is 6 years ‘© Salvage value is Rs, 20000 = MARR 15% Use IRR method to ‘elect the best project. Use MARR = 12%, (Select the best combination if A,B and Care musellyexchisive) (84) Ska Tail Investment Ra) _| 10000] 15,000 7,000 4 00 alvage Value (RS) MARR (%)‘5 Annuel Equivalent Cost of defender and challenger are given below a [a | Deteder | 3380 2 | x03 3] 3409 | se 5] as8 ey LoL 8621S) , ihe the dobeder eteager is required fr next 8 yeas } ‘Ato the work, nether defender nor the challenger willbe retained. ‘What the age oppatnent tae? 4 What ro the see ein engnersing projects in Nepal? Perfo sms ans Asse atte na eat aa eng sje over a range of 30% i 2) ial Savestent (0) Net nat ces. of i Lif Draw ale the ssi agra. Use PW fermion. (8) 1 Sey nena fon Te 2 ne ne Ream tone [ty ne ein oe oe study of economies help ‘Useful ie (ea) 6 ¥ unde oni och Now at sat i [use ess) fp FR SOD gu 4 8) Compite th Book Yale st te end of 3 Years V2) by al te Oates Rs, 100,000 see G Seem eee MACRS ratod. Cox bss of mace 1s. 10000. SV "0, . a4] Unful Lie = 5 yeas. MARR = 10% 4 . 20.000 (6+5+5] ty Bale air wx PW, The cot bass or a masne fs 10000, Te machin Atal Benet = 60.00 at tee Beas ERS pope. Over 6 years, its eximatd to eave Ra, 4500 per YG the reining yon’ HE edo is year, thera de See eine Perk annual operating cost being Rs. 1000 t wil b> depreciated 2 reas by 4,000 ach year See olS -orenanase ‘ Fee ae ; Discounted PW formu . ‘Nashine 3 yeas. Payback Ped Pak ake salvage value =| Me 4 UserRR, (eat of) Paybace Rs, 50000. Rs, 35000 Ith to slet bes Payback Petiod = 5, 20000 | Ra, 15000 Et bt rect MARR = 125, foam cost Rs. 10000 | ~ Rs, 2000, Salvage Value Rs. 15000] Ks 10000, 4) Se ——\ ayers | Spout > _EMARR Be 2 4) Seletihe baxt moshine by ERR meld, Reed study period is $ year, Tae = st so : tl Sis iebe cniatnita pa Carmaay ee by Bvaluate also by capitalized worth method. a 5+ Eepin about the aon or + Band C ar mutually excusive. 9, A machine has a Fed Coat of Rs- 40,0000, Its variable cost Rs, 45,000 Pet nit Re efeader and challenger Dubie of set. The Anal Eq 2 mahi ea voleme and vale i silng pice er wuts Bs, 60000, What woud be age MARR etn a ae eee a a proioss when fixed cost increase by 20% and sling price decreases by EaPaP Yara] ema vin ft ies eae PSHE 5 ‘3 + [rey a wy OR . (AEC): 7700] plein the Decision Tree Analysis we6 ss Nepal? A realsite developer termine i es in ing which will be Ww te me oi te ay abe se ge Selgin a = ia | i { First Cost 125,000,000 a Fetters [19900000 [978 Seige ake aa) tien 1 ‘seo li ft agen mewrsese me Sec innateom Saas roel net 02 S01 HCL Ee Serato Fa lt seep Pesca eon ‘considerisg any future inflation. The | be sedi t a weet eros rate wil be 6% and the genors hele - a cn ee eee ery, Deering ‘tinted genete E yeu it ae ACS dope sna, Over 6 you i eine 66 roy Insrite NONEEeA OF ENGINEERING ion Control coms (CBB) 1 Gina ae eared sve ter ese in 7 fem on Y Me fetes he merce Fal tr ¥ Assume suabie data ocenery Math 1 2 rts thw maki enn dn vith propia cage “ 2 a) you depose Rs1000 i se att SEcout now which gives 10% nominal interest Gvoany Be emouat she} ye inert none se ‘emi annually (3) Monthly ©) Find the vac ofPitis10%, Use tin frmul as, thrown word as fra praccable a 4 22) Bates eailot worth an rit of rum method How much pecs sid you * Gefen cow ia bank account tht gives Wintel po jag ieee a 5.10.00 per month fr 10 yeas? Be ') Yat she dea vee nul an esanonie eis? Demin both pe ot BIC ratio fto the following calons ca) Initia investmen = 300,000 ‘Aancalrevenie= 83000 ‘Aantal east = 15,000, Salvage value= 20% of initial ivestment Useful fe = 6 years, MARR » 10% ©) Compute IRR by wing land ec process ofthe fllowing project, Determine also investoeat decision, “1 Int investment 25,000 Annual revenue = 000 Salvage value = 5,000 Useful ite~5 yeas MARR = 208, 4 9) ‘Select he best proposal using ERR f=25%, MARR=20%) wy TTT sia Benes A |-e400_['3600- Paw [ a0 [100 [raa fay Propose! B|-7850—[2050_[ ste 4000-39009 Foy 1) Ste ani expin abou te eases Tmo tore Projects with example. Compete te flocs sssunpton when MARRis 86 ae 4 statngsat and dependent wosees by using repatbiity a a] z ECO ENGI 25,000 [30,900 {an 3 3,000 [Useful ie year © Salvage vas 20,08,increases by 20% 5. The new machine cont 10.0 opering cos 20 init ee. hen ern 06 Pe Re Sn roe es cl 14 9 0g Soe at nue canner wn ea. Mant ane 0% 00 ad “a aie ty 25h er mde veining ees Pere nee ie 190, Operng ease 3000 i ft oor ress , Mar 198 3) ind te eam servicio ts mative eon) 3) AECof doers ow cane wp = fase [s3e0—[ sams [sro s885 ‘When should the oid machine be eplecod with te new machine. 1 6 «) Balin devison fe Arabi, maa" &) Catate beaceven bors of option er earto become ot et ° recommended economic pump ifit is to be operated S hours daly at full load. (8) EASA any [SARVO Fang | Tas ‘oop [Pekar aa = 00000 —| | Tax per year (Rs.) 15,000 Nemes oa er) 29. Tien 90% iter $ is [seen { inicotpaian oa bo MARI Tt ge gear Yeap Rei 7. a) Define deprevation. What are the causes for it? If a-machine-costing of Rs. 1,50,000 is purchased by expeesing salvage value Rs0,000 atthe end of * year. (Calcalate deprecation amount for exch years by 5] 8) soyD Deelining balance 1) Suppose an equipment purchaied for Rs'10,00,000, tis expected to genenste income of Rs. 3,50,000 per year during $ years and corporate income tox ate is 25% per year. Under th recovery periods depreciation ae as follows. a Year =I 2 z z 3 Depreciation amount [100,000 | 500,000 1 2,08,000|,00,000 | 1,00.000 CCaleulate ATCFs and detersine profisbility (IRR) when MARR is 15% by usi method. 8, Evaluate the PW of the following proj Initial investment = Rs. 1,00,000 -» in constant doliers ‘Animal sales income = Rs. 40,000 -> in constant dolls ‘Annval labour cost™ Rs. 3,000 —> in constant dallers ‘Anmeal material X = Rs. 2,000—> in constant dollers ‘Annoa! material ¥ = Rs 1,000 in constant doers Salvage Value = 20% of initia investment - in constaxt dollers 6 Inflation rate for sales income, labour eost, materials X, material ¥ and solvage valueare 5%, BY, O%, OY and 3% respectively for the project period, Take market inteest rat2= 20% project life is 4 yeas,