QUESTION 4 (continued) while of machine B is N300, 000 only. Recommend which of the machines should be purchased. Assume 10% interest. (13mks) QUESTION 5 (25 marks) a) Why do Engineers have to monitor of depreciation of equipment/machines? (5mks) b) Enumerate the options available evaluating depreciation of equipment/machines and explain in detail anyone of them. (10mks) c) The cost of a machine N1,600,000 ant its salvage (scrap) value is N400,000. Determine the depreciation charges for each, if the estimated life of the machine is 4 years. (10mks) QUESTION 6 (25 marks) (6mks) (ii) Inventory Costs (iii) Sunk Cost (8mks) a) What are the types of equipment replacement decisions a company may face? b) Define the following terms: (i) Quality Costs (iv) Technological Obsolesce , c) A power holding company purchased new coal extraction equipment 3 years ago for N600,000. Management has discovered it is technologically outdated now. A new equipment alternative) has been identified. If a generous trade-in of N400, 000 is offered for the current equipment perform an analysis using before-tax of 10 % per year and 7% per year after-tax. Assume an effective tax rate of 34%. As a simplifying assumption, use classical straight-line depreciation option with salvage value = 0 for both alternatives. (11mks) FECT 312 1st Semester Exa MEE 312 300 LEVEL UNIVERSITY OF ABUJA FACULTY OF ENGINEERING DEPARTMENT OF MECHANICAL ENGINEERING 2018/2019 SESSION FIRST SEMESTER EXAMINATIONS Course Code/Title: FEG 312/MEE 312-ENGINEERING ECONOMICS INSTRUCTIONS: (i) Time: 2 hours (ii) Attempt any four (4) questions. QUESTION 1 (25 marks) a) What is the relationship between Engineering and Economics? Units: 2.0 (5mks) 2-11 b) Explain in detail the main features of Traditional and Modern approaches to Economics. (10mks) e) Define the following terms: (i) Keynesian School (iii) Law of Demand (iv) Consumption QUESTION 2 (25 marks) (ii) Inductive Method of Economics (v) Cross Elasticity (10mks) - a) What is Break Even Analysis? State the assumptions used during a typical Break Even Analysis (smks) b) The Cutting-Edge Brick Company (CEBC) manufactures a standard stone block for the building industry. The production capacity for the year is 100,000 standard blocks. The selling price per block is-1.60, variable costs are-N0.60 per brick and fixed costs are-N60, 000 per annum. Determine: 1. The break-even point in terms of sales revenue and output. The margin of safety if sales amount to 90,000 bricks in the year. The market for blocks becomes much more competitive, and (CEBC) reduces its price to №1.50 per brick. Sales still decline to 80,000 bricks, whilst costs rise relentlessly. Variable costs rise to 0.66 per brick and rises in business taxes and other contributions increase fixed costs to 80, 000 per annum. Is the firm still profitable? c) Define and state the levels/degrees of dumping currently available. QUESTION 3 (25 marks) (10mks) (8mks) a) In the 2018 budget, The Federal government of Nigeria issued US $274.6m Sukuk bond to construct 642.69 kilometres of roads across in the country. The money was shared equally among the six geo- political zones; each zone received US $45.6m for the number of roads to be completed in them. Six roads would be constructed in the North Central, five in the North-East, four in the North-West, another four in the South-East, six in the South-South and three in the South-West. What is Sukuk bond? Give three specific examples of projects currently financed by sukuk bond in Nigeria. What are the differences in investment returns from sukuk bonds and loans based on interest? (10mks) b) Shola invests a certain amount in three different schemes A, B and C with the rate of interest 10% p.a., 12% p.a. and 15% p.a. respectively. If the total interest that accumulates in one year was N320,. 000 and the amount he invests in scheme C was 150% of the amount he invests in Scheme A and 240% of the amount he invests in Scheme B, what was the amount he invests in scheme B? (7mks) c) ZoboCool Company expects to realize revenue of N4,750,000 next year from the sale of its product. However, sales are expected to increase uniformly with the introduction of a new drink to a level of N1,000,000 in 8 years. Determine the gradient and construct the cash-flow diagram for this firm (8mks) QUESTION 4 (25 marks) investments? a) As an Engineer, what are the options available in evaluating proposals for equipment and/or (6mks) b) The electric generating plant at the mini campus is more than 10 years old and of recent have been developing problems that are affecting its performance. As Engineer should the plant be replaced or (6mks) given a turn round maintenance? State your reasons. c) Machine A, operated manually costs N2, 000, 000 has a life of 3 years. While an automatic machine B costs N5, 000, 000 but has a life of 6 years. Operating cost for machine A is N400,000 per year