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Pokhara University
Model question 1 new course
Time: 3 hrs
Level: Bachelor
Programme: BE
Full Marks: 100
Pass Marks: 45
Course: Engineering Economics
Candidates are required to give their answers in their own words as far as practicable.
The figures in the margin indicate full marks.
Attempt all the questions.
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(a) Resource scarcity is the fundamental economic problem for every society. Discuss its solution by applying engineering principles [8]
(b) What is utility? Explain about the law of diminishing returns with focusing its stages. [7]
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(a) What do you mean by nominal and effective interest? If monthly interest rate is 1.5%, find effective and nominal rate of interest per year. [5]
(b) A person deposits Rs. 4,00,000 now by expecting interest rate 12% per year for 8 years. Find the maturity of the deposit when the interest is compounding quarterly. [5]
(c) How many deposits of Rs. 5,000 each should make per month so that the final accumulation amount will be Rs. 1,00,000 if the bank interest rate is 12% per year? [5]
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(a) What are the causes for depreciation? If a machine costing Rs. 4,00,000 is estimated to have a 10-year useful life and Rs. 50,000 salvage value, find the depreciation amount for each year by using declining balance and sinking fund methods. [7]
(b) Evaluate IRR for the following project and decide whether the project is acceptable or not? [8]
- Initial investment Rs. 5,00,000
- Annual revenue Rs. 1,20,000
- Salvage value Rs. 30,000
- Useful life 10 years
- MARR 8%
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(a) If the cost of a 20-watt CFL bulb is Rs. 275 whereas the cost of a 100-watt filament bulb is Rs. 25, but these bulbs have equal lighting power. Which bulb would you use in your house? Assume the electricity cost is Rs. 10 per unit. [7]
(b) Calculate PW of the following two mutually exclusive projects by using repeatability assumption when MARR is 10%. [8]
A B Initial cost Rs. 4,00,000 6,00,000 Annual revenue Rs. 30,000 35,000 Annual O&M cost Rs. 3,000 4,000 Useful life Year 3 9 Salvage value Rs. 4,000 7,000 OR
Determine B/C ratio by both conventional and modified methods using PW formulation for the given project.
- Initial investment Rs. 1,00,000
- Annual revenue Rs. 40,000
- Annual cost Rs. 19,000
- Salvage value: Rs. 20,000
- Useful life: 10 years
- MARR: 10%
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(a) Define types of business organization. What are the features of Joint Stock Company? Explain. [8]
(b) What is stock and bond security? How do you calculate the present value of a maturity bond? Justify with a suitable example. [7]
(c) Define accounting equation. Explain the relation between income statement & balance sheet. [7]
(d) Briefly explain the rules for debit and credit with an example. [8]
- (i) Life cycle of cost
- (ii) Cost accounting and general accounting
- (iii) Corporate and Personal tax
Write short notes on any two: [2×5=10]