BSc hing 3° SemIPE) 11 October 2023 (Moming) ISLAMIC UNIVERSITY OF TECHNOLOGY UT) ORGANISATION OF ISLAMIC COOPLRATION (OIC) DEPARTMENT OF MECHANICAL AND PRODUCTION ENGINEERING Mid-Semester Exami ion Winter Semester. A.Y. 20: Course No. IPE 4539 lime 1 Course Title: Engineering liconomy and Hinance Full Marks: 75 There are 4 (Four) Questions. Answers to questions numbered | and 4 are compulsory. Anwver either ‘question 2 or 3. Answer 3 (Three) questions altogether. Usg the graph paper wherever necessary. Marks in the margin indicate the full marks. CO/PO shown. TF a) Describe an engineer's profession (meaning/s, role/s. engineering process). Use the 6 keywords of key points but write adequately col b) Engineering education teaches students the concept “systems” in every field for the PO! benefit of mankind. “Islam is the all-embracing knowledge-based System of life given 7G by the Creator and Sustainer”. /xplain the statement relating to the scope of knowledge CO! of engineering for the overall benefit of all creatures and natural ccosystems. * POs ee sce. Pos 6 State the function of engineering economics. Point out the relevance of your registering G for this course (Engineering Economy and Finance). “ee oa oa Sate the meaning, scope/types, and importance of engineering economic decisions. col ‘A company producing some engineering products is following the budgetary timeline po} of the respective country, which is July to June of the consecutive calendar years. Its producti is given in Table below spanemeaeaa ete 15 Period" Volumeof — | ‘Total costs of | “Total | Total Remark Cy (month) | production/activity | production in | fixed | variable | Po2 [000° units) | Tk. (million) | cost_| cost | Tuk, 2020 — ‘August | {September [October ‘Draw the data in a graph paper ((otal cost vs volume, not total cost vs period) and locate the high and low activity levels in terms of production volume and cost involved (months) ii, Then, determine the variable cost per unit (v) and the total fixed cost (I). iii, Show the results in an equation in the form y= c-+vx. where y stands for the total cost or revenue, c stands for fixed costs. v stands for variable costs per unit and.x stands for volume of activity (units). iv. Verify the results (fixed costs and variable costs per unit) found from graphical solution and analytical solution, Complete the table in your answer sheetby a) b) °) d) °) When the reventie andthe total gost functions are reypeetively R = 1000Q ~ 0.0010", 4 7C = 0.0059" +4Q + 20000. i. Formulate the profit funetion ii, Calculate the quantity yow must produce to maximize profit iti, Determine the break-even volume. BEP(Q)? iv, Find the quantity to be produced to maintain the average cost. Make comment’s on, acceptable result. QB is the alternative of Q2 (answer either one Suppose you are thinking of producing an electronic timing switch, the direet material direct labor, and dircet overhead costs per unit have been estimated to be Tk50. TkS and Tk4 respectively. The selling price is decided to be 138 percent of the variable cost per unit, The maximum capacity of the firm is 160,000 units per year. Its fixed cost is Tk2,024,000 per year. For this firm: i. Find the breakeven quantity in units and in percentage of total capacity ii, Calenlate the percentage reduction in breakeven point if fixed costs are reduced 0 percent, if variable cost per unit is reduced 10 percent. iv. ... if both costs are reduced 10 percent; and if the selling price is increased by 10 percent State the top five Features of the present value of money. Cite example/s. Explaining the meaning and purposes with examples stare at least three main differences between future value and annuity. State the main similarities and differences between an annual interest rate and effective annual interest rate, Money to be invested in engineering projects over the time bears or possesses the following issues: Riba, cost of money, opportunity cost, equivalence, and optimal investment for human benefits. Describe cach of them. All undergraduate IPE students are required to complete one 3-credit-hour cours engineering economics and finance that tends to focus on comparison of alternatives Present worth (PW) analysis is a popular method used for comparing two or more alternatives for economic comparisons. Hxplain how this method is applied in selecting an IPE project out of two or more alternatives. [Hint: mention what must be required/considered, what theories should be applied, and how to reach a conclusion. A coal-based power plant wants to buy coal from a new coal mine. The price of coal changing. However, a team estimated profits over the next 5 years as below: Tk. 200.000, 450,000, 20,000, 400,000 anc 100,000 respectively. After that profits will be a constant amount of Tk 250,000 per year for the following 10 years, at which time the mine must be closed. The going discounted rate is 10%, found appropriate for the all these years; find the present value of the mine and suggest if it is economically feasible, Draw the necessary cash flow diagranvs. Suppose, plant manager asked you to find overall annual profit in terms of annuity at 10% determine that annuity along, with a cash flow diagram, 3 yr® o' 00000 to cor Por 10 col PO? 5 coz PO? 5 co Oz 7 coz POL co2 Pou wr 3 coz POHProgramme: Bi ‘Semester: 5! 1g (IPE) Date: 26 December 2023 Time: 9:00 am ~ 12:00 noon ISLAMIC UNIVERSITY OF TECHNOLOGY (IUT) ORGANISATION OF ISLAMIC COOPERATION (OIC) DEPARTMENT OF MECHANICAL AND PRODUCTION ENGINEERING Semester-Final Examination Course No. IPE 4539 Course Title: Engineering Economy and Finance Winter Semester, A.Y. 2022-2023 Time + 3 hours Full Marks: 150 There are 6 (Six) compulsory questions. Use the graph paper wherever necessary. Marks in the margin \dicate the full marks. CO/PO are shown. 1a) Inregard to the internal rate of return (IRR), state one point on each of the following = its physical meaning, objective, use, concept of calculation, and investment é decision making, Suppose a researcher in IUT would like to undertake a project on energy generation for fuel-cell systems that are hydrogen and methanol-based. During the lab research, tree equal-service machines need to be evaluated economically. The MARR is 10% select the best machine type with the costs shown in Table below. Give reason/s. | per year. Exhibiting the cash flow diagrams, perform the present worth analysis, and Ttems Solar-powered | Electric-powered | Gas-powered Tk Tk Initial cost 300,000. 350,000 300,000 \. [Annual operating costs [3,000 65,000 50,000 ~ — FAnnual maintenance 1,000 10,000 10,000 costs Salvage value 9,000 17,000 25,000 Life, years 8 8 8 ¢ annual equivalent costs have two components, namely capital costs, and operating costs. Now, the capital recovery costs CR(i%) Given: /= $20,000, can be found by (A/P.i%.n) — S(A/F. 1%, n) = (I — $)(A/P.i%, n) + iS = $4,000, n=5 years, and i= 10%. Applying the above formula evaluate the project and see if an annual revenue of $4,400 is large enough to cover the capital costs or additional revenue. Draw the necessary cash flow diagrams. 2a compare and contrast declining balance methods of depreciation from modified accelerated method and justify their naming and use of them with examples. 8 & company purchases machinery for $30,000. This assr's salvage value is $600, and its useful life is 10 years. Apply the-straight-line method, declining balance method (30%), double declining balance method and sum-of-year-digit method to calculate depreciation and show the method that will benefit the company most in terms of tax deduction. 3. a) Certain new machinery has been placed in service. Its cost basis is $100,000. Its recovery period is set to be five years and depreciation deductions are done as below: Year: 1 2 3 4 3 6 deduction Depreciation | $10,000 | $20,000 | $20,000 $20,000 $20,000 | $10,000 Say, the income tax rate remains constant at 40% during this six-year period, Determine the present worth (PW) of after-tax savings resulting from depreciation when after-tax MARR is 10% per year. oh Describe wage-price spiral in production under an inflation or deflation scenario. Ls 10 All CO3 POLL 20 Both co4 POI©) Suppose the commodity bundle in an urban family is as below (Table): Price in | Weightage | Weightage | Ttem Price in] Price in 2021 2022 2023 | in 2021_| in 2023 Food 300,000 | 450,000 _| $50,000 Fuel 180,000 | 260,000 _| 350,000 il Cloth 80,000 | 100,000 _| 130,000 i Education | 220,000 | 300,000 450,000 ZakavSadaga | 90,000 | 100,000 [120,000 J Take the year 2021 as the base year. Determine the Weightage of each item in the years 2021 and 2023. Consumer price indices in the years 2022 and 2023. Inflation rate between 2022 and 2023, ‘Average inflation rate. If a company's MARR is 10% in the base year, find the inflation-adjusted MARR in year 2023. 4 Jb ‘What information do project managers get from sensitivity analysis? Communicate the main benefits of performing sensitivity analysis to a project manager. wt ‘You have been assigned to evaluate the sensitivity of an engineering project. Its ‘estimated initial investment is TkIS million at the present time, where an expected annual income of Tk3.62 million for five years (starting from the first year). The salvage value at the end would be Tk7.2 million. Evaluate the sensitivity of the project rate of return (RoR) to 15% and.30% increase and decrease in initial investment, annual income, project life, and salvage value. Draw the appropriate diagram, Appraise the following to the manager: i. Sensitivity analysis of initial investment (for 15% and 30% increase and 15% and 30% decrease). ii, Sensitivity analysis of project life (for 15% and 30% increase and 15% and 30% decrease). iii. Sensitivity analysis of annual income (for 15% and 30% increase and 15% and 30% decrease). iv. Sensitivity analysis of salvage value (for 15% and 30% increase and 15% and 30% decrease). 5A) “We haveone beautiful planet and itis forall” Explain the statement from the point of sustainable development. ing to social, environmental and governance of ,? oo PO. Derit the key pointsfissues pe investment for development. !) From the point of working capital calculations state the key features of each of the ‘two components. i. Operational efficiency and ii, Deferred revenue. A Describe sustainable development and mention the number of UN's SDGs. ¢ if 6 A State your understanding about the public sector economy. Mention a least eight dimensions of it to the economy, society, and governance. The main diference between Islamic and conventional finance isthe treatment of Pris, and risk management. Explain how Islamic banks do manage sk. /P_ Raisin the divine concep of development and susinabiliy. Show the related illustrations/figures. End of the question paper a KF P All cos Pour 20 Both co4 POS 6 Pos. a if 3 b), ¢) All COsInternal rate of return: PW (i%) = PV(i%) = SERIO FW (1%) = FV(i%) = Diag Fy (1 + i"! AW (0%) = R - E CRC) CRCiM%) = I(A/P.,i%6,n) ~ S(A/F. 1%, n) AW = PUW(A/P. i%.n) = FW(A/F, (9m) . Shao CG 60) = ao 0) PW = Deg Re (Es i'%.t) ~ Diep Bx(Esi'%.t) = 0 Fw = dnc i'%,n- 0) ye (F/P,t'%,n = 0) = 0 Benefit cost ratio: Pia) -ewoes) awe) — ae ' a cemetary ‘Pw(B)-PW(O&M) __aveny~aw oes) Pure) = nme Bic cr B/C = ~aasyerwiouM, B/C =~ pws) Depreciation: dj = td, BV, = Bd d= BA -noLr dj=B(l-(-r)'] By =B(-r)F BY, =B8(1-r)" 2(n—t+ 1) =@ sof n(n +1) (B= Sn) (8 Bees “pts? peor [elect BY, = B -Yjardy Income tax Te = —Te(Re ~ Ee ~ du) (NIAT,) = taxable income — income tax = (Ry — Ey — dy) — Te(Rk — Ex — dy) —4)(1=T) ATCF is ATCFy = NIAT« + die = (Ry ~ Ey ~ du)(1— Te) + dy = (1 Te) (Ree — Ex) + Toe ATCFs in yeark in terms of BTCF, BTCFy = Ry — Ex ‘Thus ATCF, = BTCFe + Ty =(Re — Ex) ~ Te(Rk ~ Eq — de) = (1 -Te)(Re ~ Ex) + Tee Compound intrest Factor, Single Payment ‘Uno Payment Serie ‘ritetic Gradient Compound Present Snhing, Capital Compound Preat—Gradient Gradient ‘Amount Werth fund” Reenvery Amount” ‘Werth. Union Present Factor Facer “factor! "Yacar facie Seren” Werth Fd? 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