Q.N.3 (a) What is the significance of payback period method?

What are its

KHWOPA ENGINEERING COLLEGE drawbacks? [6]
ASSESSMENT - 2062 (EVEN) b) A man purchased a building 10 years ago for Rs. 25,00,000. Its
maintenance cost is Rs. 50,000 per year. At the end of six years, he
LEVEL:- B. E. (Computer) III/II spent Rs. 150,000 on roof repairs. After the end of 10 years, he sold the
SUBJECT:- BEG495MS, Engineering Economics building for Rs. 30,00,000. During the period of ownership, he put the
FULL MARKS:- 80 building on rent for Rs. 200,000 per year paid at the beginning of each
TIME:- 03:00 hrs. PASS MARKS:- 32 year. Use the FW method to evaluate this investment when his MARR
is 12% per year. [10]
Candidates are requested to give their answers in their own words as far as practicable.
Q.N.4 (a) What do you understand by time value of money? Describe with
Figures in the margin indicate full marks.
suitable examples. [4]
Attempt any FIVE questions. (b) Find the both types of B/C ratio using AW formulation. [12]
First cost= 100000
Q.N.1 (a) How does effective interest rate differ from nominal interest rate? [4]
Project Life= 15 yrs.
(b) The information given below shows the records of a manufacturing
Salvage value= 20000
company comparing the actual data with the data from standard cost
Annual Benefit= 75000
card. [12]
Annual O & M costs= 15000
Standard Actual
i= 15%
Production (units) 2000 7,500
Direct material (Kg) 8,000 72,000 Q.N.5 (a) What do you understand by value added tax (VAT)? [4]
Direct material cost(Rs) 1,60,000 1,29,600 (b) Using the present worth formulation recommend which one is the best
Direct labour hours 4,000 4,800 out of the following two projects. Assume repeatability. MARR = 18%
Direct labour cost (Rs) 1,00,000 1,20,000 [12]
Fixed overheads (Rs) 1,50,000 1,40,000 Project A Project B
Variable overheads (Rs) 50,000 50,000 Initial Investment 400,000 700,000
Salvage value 40,000 50,000
Calculate: (i) total material cost variance (ii) total wage variance
Annual revenues 150,000 160,000
(iii) variable overhead variance and (iv) fixed overhead variance
Annual cost 30,000 40,000
indicating the separate components of each variance.
Useful life (years) 6 8
Also indicate favorable and adverse variances.
Q.N.6 (a) Explain briefly Market Research. [4]
(b) Find the IRR for the following project: [12]
Q.N.2 (a) What do you understand by elements of cost. Explain overhead cost
End of year NET C.F.
and prime cost. [4]
0 -450,000
(b) Compute the ERR for the following project. [12]
1 - 42,500
End of Year Net Cash Flow
2 + 92,800
0 -10 million
3 +386,000
1 +1.8 million
4 +614,600
2 +1.8 million
5 - 202,200
3 +1.8 million
4 +1.8 million Q.N.7 Write short notes on (any FOUR) [4 X 4 = 16]
5 +1.8 million a. Economic system b. NPV
6 +1.8 million c. Decision tree d. Taxes law in Nepal
7 +1.8 million e. Continuous compounding f. Drawbacks of IRR
8 +2.8 million
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