26.03.

1
BE / B.TECH DEGREE EXAMINATION MARCH – 18
8
Time: 3 hours Max: 100 Marks
EIGHTH SEMESTER

MG6863 – ENGINEERING ECONOMICS

Reg.No: 5 1 2 2
 Answer ALL questions
PART – A (10 X 2 = 20 Marks)
1. Define Economics.
2. Define marginal costing.
3. List any two aims of Value engineering.
4. What is effective interest rate?
5. What is the basic concept of present worth of comparison?
6. Write about rate of return method.
7. Define economic life of equipment.
8. What is meant by challenger and defender?
9. Define depreciation.
10. Mention the procedure to adjust the inflation.
 PART – B (5 X 16 = 80 Marks)

11. (i) Mention the law of supply and demand. (8)

(a)
A company has the following details. Fixed cost = Rs. 20,00,000, Variable (8)
(ii) cost per unit = Rs. 100,Selling price per unit = Rs 200. Find (1) The
breakeven point in quantity (2) The breakeven point in sales.
(Or)
11. (i) Briefly mention the various criteria for make or buy decision (8)
(b)
ii) Explain the method of deriving the selling price of the product. (8)

12. (i) Explain the basic steps in value engineering. (8)

(a)
A person deposit a sum of Rs. 20,000 at the rate of interest of 18% (8)
(ii) compounded annually for 10 years. Find the maturity value after 10 years.
Use the single payment compound amount formula.
(Or)
12. (i) Write shot notes on time value of money. (8)
(b)
(ii) A company has to replace the present facilities after 15 years at an outlay of (8)
Rs. 5,00,000. It plans to deposit an equal amount at the end of every year for
the next 15 years at an interest rate of 18% compounded annually. Find the
equivalent amount that must be deposited at the end of every year for the
next 15 years. Use annual equivalent payment series method.

13. An engineer has two bids for an elevator to be installed in a new building.
(a) The details of bids for an elevator are as follows, suggest the best
alternative

Service life Annual Initial cost (Rs)

(Years) operation and
maintenance
cost(Rs)
Alpha Elevator 15 27,000 4,50,000
Beta elevator 15 28,500 5,40,000
(16)
(Or)
13. Explain revenue dominated and cost dominated cash flow diagram and (16)
(b) different method of comparison.

14. Explain the different types of maintenance in detail. (16)

(a)
(Or)
14. Two years ago the machine was purchased at a cost of Rs. 2,00,000 to be (16)
(b) useful for 8 years. Its salvage value at the end of the life is Rs. 25,000. The
annual maintenance cost is Rs.25,000. The market value of present machine
is Rs. 1,20,000. Now, a new machine to carter to the need of present
machine is available at Rs. 1,50,000 to be useful for 6 years. Its annual
maintenance cost is Rs. 14,000. The salvage value of new machine is Rs.
20,000. Using the interest rate of 12% find whether it is worth replacing the
present machine with new machine.

15. Explain the various method of Depreciation. (16)

(a)
(Or)
15. Explain the procedure to adjust the inflation and discuss the determination (16)
(b) of economic life of an asset.