Process Economics - Semester Exam Question

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Part A (20 x 2 = 40 Marks)

1. In the sinking fund deposit method the annual uniform payment 'R', when the principal is 'P' sinking fund interest is 'I' and the period is 'n', is given by ______.
2. Define 'Depletion'
3. Name any four methods of calculating depreciation
4. What is meant by capitalized cost? Where is it used?
5. A storage tank was priced at Rs.5000 in 1982 when the cost index was 460. What is its value today when the cost index is 800?
6. Define 'Acid Test'
7. List the factors to be considered in the evaluation of capital requirements for a process plant
8. Explain the term 'Capacity factor'
9. Define : Capitalized earning rate and capitalized pay-out time
10. Discuss incremental costs for economic analysis
11. Explain the terms: benefit cost ratio and profitability index
12. Name the different methods of selecting various alternates
13. What is meant by elasticity of demand?
14. Explain: Consumer surplus
15. What are the different types of business cycles?
16. What is GNP?
17. What is fatigue?
18. Name the different types business cycles
19. What is meant by merit rating?
20. Explain Accident proneness

Part B (5 x 12 = 60 Marks)

21. A process plant has an initial investment of Rs.50 lakhs. The estimated salvage value is Rs.2 lakhs. It has a life of 8 years. Estimate the book value of the plant after 5 years by (a) Straight line depreciation method (b) Declining balance method and (c) Sinking fund method with a sinking fund interest rate of 10%.

Or

22. A pump installation costing Rs.2000 has a salvage value of Rs.400. It requires Rs.200 for its annual maintenance. If the value of the money is 10% and the pump has a life of 3 years, what is the present worth of service rendered by the pump? What is the capitalized assuming perpetual operation?
23. Discuss in detail the various components of a balance sheet and the economic ratios and their significance

Or

24. The annual fixed charges for the plant is Rs.1,00,000 and the variable cost is Rs.1,40,000 at 70% capacity with a net sales of Rs.2,80,000.

(a) What is the BEP in units of production is the selling price per unit is Rs.40

(b) If the product produced above BEP is dumped abroad at a price 15% more than the variable cost, what is the new gross profit at 100% capacity?

25. A furnace installation 'A' costs Rs.1.2 lakhs with operating cost at Rs.48,000 per annum. It has a life of 10 years. The installation 'B' guarantees same performance with an operating cost of Rs.38,000 with an initial cost of Rs.2.5 lakhs. Salvage value for both is Rs.10,000. What increase in life would be required for plan 'B' to warrant its selection if money is worth 10%.

Or

26. The following proposals are under consideration:

Proposal	A	B	C	D	E
Initial outlay, Rs.	25,000	23,000	12,000	20,000	45,000
Annual cash flow, Rs.	3,000	4,000	2,000	4,000	9,000
Life, years	10	6	7	9	12

Rank these proposals (a) in the order of profitability after payback period, and (b) Net present value method assuming an interest rate of 10%.

27. Discuss 'Keynesian theory of Income and Employment'.

Or

28. Write short notes on:

(a) BEP (b) Cost analysis, and (c) Multiplier and accelerator

29. Discuss product life-cycle and market segmentation

Or

30. Write short notes on:

(a) Job evaluation

(b) Sale forecasting, and

(c) Scientific selection procedure

Last Modified on: 04-Feb-2022

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