KSK COLLEGE OF ENGG & TECH

MG2451 ENGINEERING ECONOMICS & COST ANALYSIS

SEM/YEAR: VIII/IV

K.S.K COLLEGE OF ENGINEERING & TECHNOLOGY

DEPARTMENT OF MECHANICAL ENGINEERING

SUB.NAME

: ENGINEERING THERMODYNAMICS

BRANCH

: MECHANICAL

YEAR/SEM : IV / VIII

QUESTION BANK

T. MUTHAMIZHA-AP/MECH

KSKCET

KSK COLLEGE OF ENGG & TECH

MG2451 ENGINEERING ECONOMICS & COST ANALYSIS

SEM/YEAR: VIII/IV

UNIT-I
PART-A
1. Explain law of supply and demand?
2. What are the ways by which the Economic efficiency can be improved?
3. Define engineering economics?
4. Define marginal cost?
5. Define marginal revenue?
6. Define sunk cost?
7. Define break even analysis?
8. Define P/V ratio.
9. Define processes planning?
10. Define opportunity cost.
11. Differentiate between engineering efficiency and economic efficiency.
12. Define Economics?
13. Write any four goals of economy?
14. Write about factors in fluency demand?
15. Write about factors influence supply?
PART: B
1. From the following figures find out.
a. The break even sales quantity.
b. The break even sales.
c. The production quantity is 30,000. Find contribution and margin of safety.
Fixed cost = Rs. 10,000, Variable cost per unit = Rs. 50, Selling price per unit = Rs.100
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2. Explain in detail about flow in an economy?
3. Explain the concept of law of supply and demand with suitable example?
4. Briefly explain about element of cost and its classification?
5. Define breakeven point draw a break even chart and explain its components.
6. Briefly explain about process planning and its various types?

UNIT: II
PART A
1. What are the approaches available for make or buy decision?
2. Define value engineering?
3. Write any two uses of value engineering?
4. Write the basic steps of value engineering?
5. Define time value of money.

T. MUTHAMIZHA-AP/MECH

KSKCET

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KSK COLLEGE OF ENGG & TECH

MG2451 ENGINEERING ECONOMICS & COST ANALYSIS

SEM/YEAR: VIII/IV

6. Define single payment compound amount method?

7. Define single payment present worth factor?
8. Define equal payment series sinking fund factor method
9. Define equal payment series present worth factor method?
10. Define equal payment series capital recovery factor method
11. What are cash equivalents?
PART: B
1. Write about the aim of value engineering and briefly explain the steps of value engineering.
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2. Mr. Ganesh is planning for his retired life he has 10 more years of service, he would like to
deposit 20% of his salary which Rs.10,000. At the end of the first year and thereafter he
wishes to deposit every year with an annual increase of Rs.2000 for the next 9 years at an
interest rate of 20%. Find the total amount at the end of 10th year at which time he retires.
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3. Explain in details about criteria for make or buy decision and its approaches? (Also see
problems).
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4. Write the equation for interest compounding of a capital(yearly, Half yearly and quarterly
Compounding).
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5. The management of an company finds that while the cost of making a component part is Rs.
10 the same is available in the market at Rs.9 with an assurance of continuous supply.
Give a suggestion whether to make or buy this part, give also your views in case the supplier
reduces the price from Rs. 9 to Rs. 8.
The cost information is as follows:
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Particulars
Material
Direct labour
Other variable
expenses
Fixed expenses
Total

Amount in Rs.
3.50
4.00
1.00
1.50
10

6. A company has to replace a present facility after 15 years at an outlay of Rs. 5 Lakhs. It
plans to deposit an equal amount at the end of every year for the next 15 years at an
interest rate of 18% compounded annually. Find the equivalent amount that must be
deposited at the end of every year for the next 15 years.
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7. Compare and contrast the six basic types of time value of money problems with an example
situation in which they would each apply.
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8. Problems in single payment compound amount method?
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9. Problems in single payment present worth factor?
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10. Problems in equal payment series sinking fund factor method?
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T. MUTHAMIZHA-AP/MECH

KSKCET

KSK COLLEGE OF ENGG & TECH

MG2451 ENGINEERING ECONOMICS & COST ANALYSIS

SEM/YEAR: VIII/IV

UNIT III
PART A
1. Write down the techniques for comparing the worthiness of the project?
2. Define present worth method ( Revenue dominated cash flow diagram)
3. Define future worth method( Revenue dominated cash flow diagram)
4. Define future worth method(cash dominated cash flow diagram)
5. Define Annual equivalent method(Revenue dominated cash flow diagram)
6. Define Annual equivalent method (cost dominated cash flow diagram)
7. Define rate of return method?
PART B
1. A company must decide whether to buy machine A or machine B.
Particulars
Initial Cost
Useful life, in years
Salvage value
Annual maintenance cost

Machine A
Rs. 4,00,000
4
Rs. 2,00,000
Rs. 40,000

Machine B
Rs. 8,00,000
4
Rs. 5,50,000
0

At 12% interest rate, which machine should be selected?(Use future worth method of
comparison).
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2. A transport company has been looking for a new tyre for its truck and has located the
following alternatives.
Brand
A
B
C
D

Tyre Warranty(Month)
12
24
36
48

Price per tyre (Rs.)

1,200
1,800
2,100
2,700

If the company feels that the warranty period is a good estimate of the tyre life and that
a nominal interest rate (compounded annually of 12% is appropriate, which tyre should it
buy?)
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3. The cost of erecting an oil well is Rs.1,50,00,000 the annual equivalent yield from the oil
well is Rs. 30,00,000. The salvage value after its useful life of 10 years is Rs. 2,00,000.
Assuming an interest rate of 18% compounded annually. Find out whether the erection of
the oil well is financially feasible based on present worth method.
(16)

T. MUTHAMIZHA-AP/MECH

KSKCET

KSK COLLEGE OF ENGG & TECH

MG2451 ENGINEERING ECONOMICS & COST ANALYSIS

SEM/YEAR: VIII/IV

4. A person is planning a new business the initial outlay and cash flow pattern for the new
business are as listed below. The expected life of the business is 5 years. Find the rate of
return for the new business.
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Period
Cash flow
Rs.

0
-1,00,000

1
30,000

2
30,000

3
30,000

4
30,000

5
30,000

5. Explain the concept cash flow and different methods of comparison of alternatives. List the
merits and limitation of each method if any.
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UNIT IV
PART A
1. Write the different types of maintenance?
2. Define Break down maintenance and prevention maintenance.
3. Define Break down maintenance ?
4. Write the different types of Replacement?
5. Define economic life of an asset
6. What are the types of Replacement policies?
PART B
1. Give a detailed account on the various types of replacement problems with examples.
2. Explain various maintenance types with examples.
3. What are the general guidelines in framing replacement policies?
4. What is defender challenger concept in replacement? Illustrate with an example.
5. Explain the causes for replacement of assets, in detail with examples.
6. Explain the concept of life cycle analysis cost.
7. Explain the concept of Challenger and Defender
8. Initial cost of a machine is Rs 6,00,000, with other details as below:
Year
1
2
3
4
5
Resale value (Rs) 4,20,000 3,00,000 2,04,000 1,44,000 96,500
Cost of spares (Rs) 40,000 42,700

48,800

57,000

68,000

Cost of labour (Rs) 1,40,000 1,60,000 1,80,000 2,10,000 2,50,000

Determine the optimum period for replacement of the machine.

T. MUTHAMIZHA-AP/MECH

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KSKCET

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KSK COLLEGE OF ENGG & TECH

MG2451 ENGINEERING ECONOMICS & COST ANALYSIS

SEM/YEAR: VIII/IV

UNIT-5
PART A
1. Define Depreciation and Book Value.
2. What are the types of Depreciation?
3. Define Straight line method of depreciation?
4. Define Declining and Double declining balance method of depreciation.
5. Define Sum of the year-digits method of depreciation?
6. Define sinking fund method of depreciation?
7. Define Service output method of depreciation?
8. Define inflation?
9. Define Amortization
10. List the causes of depreciation.
11. What are the calculations for straight line depreciation method?

PART B
1. A Problems in different types of depreciation methods such as sinking method, Straight
line Method and double declining balancing method.
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2. Problems in inflation adjusted decision
3. Problems in finding the economic life of an asset
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4. How to adjust inflation, accelerated depreciation in evaluating public alternatives? Explain
The procedure.
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5. Find the depreciation annuity by annuity method after three years, when the initial cost of
the machine is Rs 8,00,000 an salvage value at the end of three years is Rs 4,00,000.Rate of
interest 10 % . (16)
6. What is economic life of an asset? How to determine it? Explain
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7. The cost of a machine is Rs 1,60,000 and its scrap value is Rs 40,000 .Estimate life 5 years
using sum of years digits method, determine depreciation charges for each year.
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8. A company has purchased a bus for its officers for Rs. 10,00,000 the expected life of the bus
is Rs. 1,50,000. Find the following using the sinking fund method of depreciation.
a. Depreciation at the end of the 3rd year and 5th year.
b. Book value at the end of the 2nd year and 6th year.
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T. MUTHAMIZHA-AP/MECH

KSKCET