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    PW, Aw, FW PDF

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    Hermain Fayyaz Karim
    This document contains 7 practice problems related to engineering economics and management involving annual worth, present worth, and future worth analysis. The problems cover topics like evaluating the justifiability of investments in robots, equipment, buildings, automobiles, and power sources based on their costs, revenues, expenses, useful lives, and required rates of return. The objective is to determine which options are desirable investments using techniques like present worth, annual worth, and future worth analysis.

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    PW, Aw, FW PDF

    Uploaded by

    Hermain Fayyaz Karim
    201 views1 page
    This document contains 7 practice problems related to engineering economics and management involving annual worth, present worth, and future worth analysis. The problems cover topics like evaluating the justifiability of investments in robots, equipment, buildings, automobiles, and power sources based on their costs, revenues, expenses, useful lives, and required rates of return. The objective is to determine which options are desirable investments using techniques like present worth, annual worth, and future worth analysis.

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    This document contains 7 practice problems related to engineering economics and management involving annual worth, present worth, and future worth analysis. The problems cover topics like evaluating the justifiability of investments in robots, equipment, buildings, automobiles, and power sources based on their costs, revenues, expenses, useful lives, and required rates of return. The objective is to determine which options are desirable investments using techniques like present worth, annual worth, and future worth analysis.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    201 views1 page

    PW, Aw, FW PDF

    Uploaded by

    Hermain Fayyaz Karim
    This document contains 7 practice problems related to engineering economics and management involving annual worth, present worth, and future worth analysis. The problems cover topics like evaluating the justifiability of investments in robots, equipment, buildings, automobiles, and power sources based on their costs, revenues, expenses, useful lives, and required rates of return. The objective is to determine which options are desirable investments using techniques like present worth, annual worth, and future worth analysis.

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    Engineering Economics & Management (EF-305)

    Practice Problems of Annual, Present & Future Worth Analysis

    Q#1 A Robot must be purchased & install to automate the operation. Robot purchased
    price is Rs. 200,000/- and annual maintenance & operation cost is Rs. 64,000/- and
    annual generated revenue is Rs. 100,000/- with 10 years useful life and no scrap value.
    Company will accept any investment that can earn at least 12% interest per year. is the
    given investment justifiable for company? Evaluate on the basis of PW, AW & FW.
    Q#2 An investment of Rs. 10,000/- can be made in a project that will produce a uniform
    annual revenue of Rs. 5,310/- for five years and then have a scrap value of Rs. 2000/-.
    Annual expenses will be Rs. 3000/- each year. The company is willing to accept any
    project that will earn 10% per year or more before income taxes on all invested
    capital. Show whether this is desirable investment by using PW method.
    Q#3 A piece of new equipment has been proposed by engineers to increase the production
    of a certain manual welding operation. The investment cost is Rs. 25,000/- and the
    equipment will have a market value of Rs. 5000/- at the end of study period of five
    years. Increased productivity attributes to the equipment will amount to Rs. 8000/-
    per year. MARR=20%. Is this proposal a sound one? Use PW method.
    Q#4 You purchased a building five years ago for Rs. 100,000/-. Its annual maintenance
    expense has been Rs. 5000/- per year. At the end of three years, you spent Rs. 9000/-
    on roof repairs. At the end of five years, you sell the building for Rs. 120,000/-. During
    the period of ownership, you rented the building for Rs. 10,000/- per year paid. Use
    AW method.
    Q#5 A consulting engineering firm is considering two models of automobiles for the
    company principals. A US model will have a first cost of Rs. 22,000/-, an annual
    operating cost of Rs. 2000/- and a scrap value of Rs. 12,000/- after 3 years. A Japanese
    model will have a first cost of Rs. 26,000/- an operating cost is Rs. 1200/- and a Rs.
    15,000/- scrap value after 3 years. At an interest rate of 15% which model should the
    consulting firm buy? Analyse PW.
    Q#6 A remotely located air sampling station can be powered by solar cells or by running an
    electric line to the site and using conventional power. Solar cells will cost Rs. 12,600/-
    to install and will have a useful life of 4 years with no salvage value. Annual cost for
    inspection cleaning etc are expected to be Rs. 1400/-
    A new power line will cost Rs. 11,000/- to install with power costs expected to be Rs.
    800/- per year since the air sampling project will end in 4 years, the scrap value of the
    line is zero.
    MARR is 14%. Which alternative should be selected on PW analysis basis.
    Q#7 An industrial engineer is considering two robots or purchased by a fibre-optic
    manufacturing company. Robot X will have a first cost of Rs. 82,000/-, an annual
    maintenance & operation cost of Rs. 30,000/- and a scrap value of Rs. 40,000/-
    Robot Y will have a first cost of Rs. 97,000/-, an annual maintenance & operation cost
    is Rs. 27,000/- and a scrap value of Rs. 50,000/-
    Which Robot should be selected on the basis of FW analysis at MARR is 15%, use a 3
    years study period.

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