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1. a) As an engineer how will you compute single payment compound amount factor?

Illustrate with your own


example.

b) Describe the various concepts of Engineering Economics and analyze its efficiency.
2. a) Alpha Finance Company is coming with an option of accepting Rs.10000 now paying a sum of Rs.160000
after 20 years. Beta finance company is coming with a similar option of accepting Rs.10000 now and
paying a sum of Rs.300000 after 25 years.Compare and select the best alternative based on future worth
method of comparison with 15% interest rate compounded annually. ii) Find the best alternative using the
annual equivalent method of comparison. Assume an interest rate of 15% compounded annually.
Alternative A B C
Initial cost 5,00,000 8,00,000 6,00,000
Annual receipt 2,00,000 1,50,000 1,20,000
Life (years) 10 10 10
Salvage value 1,00,000 50,000 30,000

b) Explain the procedural steps of value engineering with a suitable example.


3. a) Compare and contrast the present worth method with future worth method.

b) Summarize the different types of rate of return methods in engineering decision making.
4. a) Write an essay on maintenance and replacement analysis.

b) i) Discuss about Simple probabilistic model for items which fail completely.
(ii) Two years ago, a machine was purchased at a cost of Rs.2, 00,000 to be useful for eight years. Its
salvage at the end of its life is Rs.25, 000. The annual maintenance cost is Rs. 1, 20,000. Now, a new
machine to cater to the need of the present machine is available at Rs. 1, 50,000 to be useful for six years.
Its annual maintenance cost is RS. 14,000. The salvage value of the new machine is RS. 20,000. Using an
interest rate of 12%, find whether it is worth replacing the present machine with the new machine.
5. a) Discuss different methods of calculation of depreciation.

b) Define inflation and also explain about the procedure to adjust inflation.

6. a) An electronic equipment contains 1000 resistors. When any resistor fails, it is replaced. The cost of
replacing resistor individually is Rs. 10. If all the resistors are replaced at the same time, the cost per
resistor is Rs. 4. The per cent surviving S(i) at the end of month i is tabulated as follows.

i 0 1 2 3 4 5 6
S(i) 100 96 89 68 37 13 0
What is the optimum replacement plan?

b) A company has purchased an equipment whose first cost is Rs. 1,00,000 with an estimated life of eight
years. The estimated salvage value of the equipment at the end of its lifetime is Rs. 20,000. Determine the
depreciation charge and book value at the end of various years using the straight line method of
depreciation.