ENGINEERING ECONOMICS FINAL EXAM CHEMICAL ENGINEERING DEPARTMENT DEPARTMENT,, GADJAH MADA UNIVERSITY MONDAY, MONDAY, JUNE 9, 2008, 120 MIN, CLOSED BOOKS INSTRUCTOR: BUDHIJANTO, ST, MT, P!D
1. The alterna alternati tives ves for an engineer engineering ing project project to recover recover most of the energy energy presently presently being lost in the primary cooling stage of a chemical processing system have been reduced reduced to two designs. designs. The estima estimated ted capital capital investm investment ent amount amountss and annual annual expense savings are as follows: E"# $% Y&'(
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0 –$10!000 –$"0!000 1 0!000 # 0 !0 0 0 " 0!000 1 # 0 !0 0 0 # 0!000 " # 0 !0 0 0 0!000 # # 0 !0 0 0 %ssume that the &%'' is 10( per year! the study period is four years! and the mar)et value is *ero for all two designs. +etermine the preferred alternative using the incremental analysis procedure ,the -'' method. ". /elect the the preferred preferred investment investment alternativ alternativee from the mutually mutually exclusive exclusive pair shown shown in the following table based on: a. The The repea repeata tabi bili lity ty assum assumpti ption on with with an eight eighty year ear study period period.. se se the the %2 method. b. The coterminated assumption with an eightyear study period. se the 32 method. The &%'' is 10( per year. %lternative 1 %lternative " 4apital investment $0 ! 000 $0!000 %nnual revenues less expenses $1" ! 000 $10!000 &ar)et value $" ! 000 $0!000 seful life ,years 5 #. 6nginee 6ngineerin ringg projects projects %! %! 7! 4! and + are being being considere consideredd with cash flows flows estimated estimated over 10 years as shown in the following table. % 7 4 + 4apital investment $#0!000 $ " " !0 0 0 $ 8 0 !0 0 0 $ 5 " !0 0 0 %nnual revenues less expenses 5!000 9 !0 0 0 1!000 15!000 &ar)et value # !0 0 0 " !0 0 0 !0 0 0 8 !0 0 0 rojects 7 and 4 are mutually exclusive! roject % depends upon 7! and roject + depends upon 4. The capital investment budget limit is $100!000! and the &%'' is 1"( per year. 2hich investment alternative ,combination of projects should be selected; se the 2 method. . % company company purchased purchased a machine machine for for $1!000. $1!000. -t paid sales sales taxes taxes and shipping shipping costs costs of $1!000 and nonrecurring installation costs amounting to $1!"00. %t the end of three years! the company had no further use for the machine! so it spent $00 to have the machine dismantled and was able to sell the machine for $1!00. a. 2hat 2hat is is the the cost cost basi basiss for the machin machine; e; b. The company had depreciated the machine on a /traight
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