QUIZ 1(2) SEMESTER MAY 2017GCB3173 / GBB3173

Name: ID: Course:

Answer ALL questions

1. A project engineer in the Kencana Sdn Bhd is searching a replacement for an

aging testing machine. One of her engineering technicians found two equivalent
machines that have the following estimates.

Machine 1 Machine 2
First cost, $ -$6,500 -$9000
Net cash flow, $/year R 3000
Salvage, $ 200 300
Life, years 4 6

Determine the annual net cash flow R that is necessary to make the two
machines economically indifferent. The company uses MARR of 10% per year in
evaluating the economic feasibility of its engineering projects.

[10 marks]

1
QUIZ 1(2) SEMESTER MAY 2017GCB3173 / GBB3173
Name: ID: Course:

2. The annual operating expenses of an old boiler are $70,000 per year. The boiler
can be used for 5 years more. At the end of the fifth year it will have no salvage
value. The present MV is $30,000 if it were to be sold now.

A new boiler costs $120,000. Its operating expenses are estimated at $40,000 per
year. It will have a salvage value of $30,000 at the end of the fifth year.

Assess whether the old pressure vessel should be replaced or retain. Use MARR
of 10% per year. Show your calculation.

[10 marks]