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EEPM Fall 2020 Sessional V2

This document contains a midterm examination for a chemical engineering course on engineering economics and project management. It consists of 3 questions. Question 1 asks students to calculate the annual amount needed to fund replacing a $40,000 distillation tower after 10 years using an annuity at 5.5% interest, and to determine the asset value of the tower after 5 years using straight-line depreciation. Question 2 asks students to calculate the amount in a savings account after 10 years at 6% interest compounded monthly, and the time to double an amount at the same rate compounded semiannually. Question 3 asks students to determine if replacing a $45,000 batch reactor with an $85,000

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73 views2 pages

EEPM Fall 2020 Sessional V2

This document contains a midterm examination for a chemical engineering course on engineering economics and project management. It consists of 3 questions. Question 1 asks students to calculate the annual amount needed to fund replacing a $40,000 distillation tower after 10 years using an annuity at 5.5% interest, and to determine the asset value of the tower after 5 years using straight-line depreciation. Question 2 asks students to calculate the amount in a savings account after 10 years at 6% interest compounded monthly, and the time to double an amount at the same rate compounded semiannually. Question 3 asks students to determine if replacing a $45,000 batch reactor with an $85,000

Uploaded by

sukhmani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Faculty of Engineering

School of Civil and Chemical Engineering


B. Tech Chemical Engineering
VII Semester
Mid Term Examination I
CE1708/1702 Engineering Economics and Project Management
(CLOSED BOOK)
Duration: 1 Hours Max. Marks: 20

Instructions:
• Answer all questions
• Missing data, if any, may be assumed suitably.
• Calculator allowed

Q1. The original cost for a distillation tower is $40,000, and the useful life of the tower is estimated to
be 10 years. How much must be placed annually in an annuity at an interest rate of 5.5% p.a. to obtain
sufficient funds to replace the tower at the end of 10 years? If the scrap value of the distillation tower
is $3500, determine the asset value (i.e., the total book value of the tower) at the end of 5 years based
on straight line depreciation. (10 Marks)
Q2. What total amount of funds before taxes will be available 10 years from now if $10,000 is placed
in a savings account earning an interest rate of 6% pa compounded monthly? How many years will be
required for this amount to double at the same interest rate compounded semiannually? (10 Marks)
Q3. A chemical company is considering replacing a batch reactor with a continuous reactor. The old
unit cost $45,000 when new 5 years ago, and depreciation has been charged on a straight-line basis
using an estimated service life of 10 years with a final salvage value of $1000. The new unit would cost
$85,000. It would save $25,000 per year in expenses not including depreciation. The straight-line
depreciation period is taken to be 10 years with a zero salvage value. All costs other than those for labor,
insurance, taxes, and depreciation may be assumed to be the same for both units. The old unit can now
be sold for $5,000. Income tax is 30% per year. If the after-tax minimum acceptable return on any
investment is 17%, should the replacement be made? (20 Marks)
---------------------------------------------------------------XXX-----------------------------------------------------
COURSE OUTCOMES ATTAINMENT – SUMMATIVE ASSESSMENT USING MTE 1 QUESTIONS

CO CO Statement MTE11 MTE12 MTE13


CE1708.1 Present and discuss the 1 1 1
‘Economic Evaluation’
fundamentals and Project
Management techniques (Gantt
Chart / Networks (CPM / PERT /
Others).
CE1708.2 ‘Arm’ the student with the 1 1 3
methodology to evaluate project
investment alternatives.

CE1708.3 Develop the employability skills 1 1 1


to manage projects and identify
bottlenecks for better scheduling
and control.

CE1708.4 Develop employment / 2 2 3


entrepreneurship skills for
economic evaluation and
investment decision methods /
project management techniques.

1- Low Correlation; 2- Moderate Correlation; 3- Substantial Correlation

(Dr. Harsh Pandey) (Dr. Gaurav Kataria)


PAPER SETTER MODERATOR HoD

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