Cairo University Faculty of Engineering

3rd Year Mechanical Power Engineering Economy [MEP 3050]

Mid Term Examination December 2022 Time Allowed: 50 min

Solve the following problems:

1. The following two cash flows are said to be economically equivalent at 10% interest.
Determine the value of x.

Years

Years

2. You have decided to upgrade a burner of the boiler operated in your factory that runs on
fuel oil to a natural gas unit. The investment will be L.E. 16,000 installed. The cost of the
natural gas will average L.E. 360 monthly rather than L.E. 870 monthly for the fuel oil. If
the simple interest rate is 12%, how long will it take to recover the investment?

3. A company purchased a machine for L.E. 15,000. It paid sales taxes and shipping costs
of L.E. 1000 and installation costs amounting to L.E. 1,200. At the end of five years, the
company had no further use of the machine, so it spent L.E. 500 to have the machine
ready to be sold. The company sold it for L.E. 2,500. Depreciation is accounted using the
declining-balance method. Calculate the depreciation charge of the third year and the BV
after the fifth year.

Good Luck!
Dr. M. Rashed
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