Exam Assessment

2077 Mangshir Level B.E. Full Marks 20

Program BEL/BEX/ Pass Marks 8
BCE/BCT
Year/Part III/II Time 1 hr

Subject: Engineering Economics (CE655)

√Candidates are required to give their answers in their own words as far as practicable
√Attempt all questions
√The figures in the margin indicate Full Marks
√Assume suitable data if necessary

1. An Equipment Costs 2,50,000 and has a salvage value of Rs 50,000 at the end of its
expected life of 5 years. Annual expenses will be Rs 40,000 and it will produce a revenue
of Rs 1,20,000 per year. Assume MARR =↋= 20% (4+4+4)
a) Evaluate the IRR using AW formulation
b) Evaluate both types of B/C ratio using FW formulation
c) Evaluate ERR .

2. Three mutually exclusive alternatives are to be compared by the rate of return method
and are described below. MARR is 10% and salvage value is 20% of the first cost. Which
option would you recommend by IRR method? (8)

X Y Z
First Cost, Rs 70,000 60,000 100,000
Annual income, 15,000 10,000 18,000
Rs
Economic Life 8 years 8 years 8 years