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ngineering Ma
anagement Priinciples and E
Economics Page 1 of 13
Final Exam
m (May 2014) Insstructors: Drs. G.J. Gouw & Z
Z. Zhu
Concordia University
Faculty
F off Engineering and C
Computer Science
ENGR 301 Final Exa am (time aallowed is 3 hours)
Name: _________
_________
_________
______________ IID#: __________________
Instructiions:
1- This
T is a CLO OSED BOO OK exam. Maximum
M grrade is 55 pllus 1 extra ccredit.
2- This
T is a mulltiple choicee exam, with h only one ccorrect answwer per queestion.
3- Exam
E questions booklett is to be retturned with the answerr booklet.
4- Only
O Facultyy of ENCS approved
a caalculators arre allowed.
5- Mark
M the corrresponding
g space on thet multiplee choice answ wer sheet.
6- Only
O the multiple choicee answer sh heet will be m
marked.
Questionns (1-2):
he following questions:
Using thee interest ratte 10%, please answer th
(1) Net
N present worth
w for the above cash flow is close to:
a)) $720 b) $113 c) $40 d) $$44
________
__________
___________
__________
_______________________________________________
n (3):
Question
X X X X X
0 1 2 3 4 5
Years
Questio
on (4):
(4) The
T net preseent worth forr the above cash
c flow, wiith an interest rate of 12% for years 1 to
4,, and 10% th
hereafter, is close
c to:
(6) The
T main adv vantage of a matrix organ
nizational sttructure is:
a)) High mannagement and administraation cost
b) Better commmunication ns
c)) Risk operrating rules
d) Absolute authority to project man
nager
(7) Lump-sum
L co
ontract mean ns:
a)) Project pricce is fixed
b) Project price is calculaated per area, volume, etcc.
c)) Owner pay ys direct costt plus fixed percentage
p
d) Owner pay ys direct costt, indirect co
ost plus fixedd percentagee
(8) Which
W statem
ment with resspect to the project
p life ccycle is FALLSE:
a)) Project cost and stafffing level begin slowlly at the beeginning off the projectt and
decrease ata a faster raate at the end
d of the projeect
b) The cost of changes is lowest at a the beginnning of the project and increases aas the
project prrogresses
c)) Stakeholdder influencee, risk and un ncertainty arre greatest aat the beginnning of the prroject
and decreease as the prroject progreesses
d) Stakehold der influencee, risk and uncertainty
u aare lowest att the beginniing of the prroject
and increaase as the prroject progreesses
__________________ ___________ __________ ______________________________________________
ENGR 301/4 R & SS: Engineering Management Principles and Economics Page 3 of 13
Final Exam (May 2014) Instructors: Drs. G.J. Gouw & Z. Zhu
Question (9):
Sirius-7 engineering company intends to purchase an alternative energy generating system to
reduce its energy costs. It has estimated that the purchase price of the alternative energy system
will be $70,000 and it will have a useful life of 10 years, after which it will be sold for $10,000.
The company expects to begin to realize savings in its energy costs two years after acquiring the
system. In this regard, it expects that initial savings will be $4000 a year for four years and will
decrease by $500 a year until the useful life of the energy system has been reached. The
company expects to perform annual maintenance on the alternative energy system at a cost of
$1700 commencing on the 3rd year and ending on the 9th year.
Which one of the following cash flow diagrams represents the companys cash transactions with
respect to the alternative energy generating system over the next 10 years?
______________________________________________________________________________
Questions (10-11):
An investor can make 3 end of year payments of $15,000, starting this year, which will generate
a receipt of $10,000 at the end of year 4, which will increase annually by $2500 for the following
4 years. The investment will earn a return of 10%.
Question (12):
A company has expanded its business to include the assembly of sewing machines. The 3rd
sewing machine took 75 hours to be assembled and the 12th sewing machine took 59 hours.
Based on the learning curve equation and a labour cost of $95/hour, the estimated cost of the 20th
sewing machine is close to:
______________________________________________________________________________
Questions (13-17):
Consider the following investment alternatives and 10% interest rate:
______________________________________________________________________________
ENGR 301/4 R & SS: Engineering Management Principles and Economics Page 5 of 13
Final Exam (May 2014) Instructors: Drs. G.J. Gouw & Z. Zhu
Questions (18-24):
Consider the following two investments A and B with the following sequences of cash flows:
(20) Based on the above questions (18) and (19), the IRR for alternative A is close to:
a) 12.5% b) 13.8% c) 15.9% d) 11.7%
(23) Based on the above questions (21) and (22), the IRR for alternative B is close to:
a) 15.4% b) 17.8% c) 10.7% d) 19.3%
(27) Organizations performing projects may divide each project into phases. Collectively,
project phases are known as the:
a) Project waterfall
b) Project life cycle
c) Project life stages
d) Project life quality circle
Network Diagram for questions (29-35): Note: You may make notes in this diagram
ENGR 301/4 R & SS: Engineering Management Principles and Economics Page 8 of 13
Final Exam (May 2014) Instructors: Drs. G.J. Gouw & Z. Zhu
Questions (36-41):
The purchase price of a machine is $7500, its estimated salvage value is $3000, and its service
life is 5 years. Please answer the following questions:
(37) The book value of the machine at the end of year 3 is:
a) $5700 b) $3900 c) $4800 d) $4700
(39) The book value of the machine at the end of year 4 is close to:
a) $1080 b) $925 c) $972 d) $900
(41) The book value of the machine at the end of year 4 is close to:
a) $3000 b) $3300 c) $3800 d) $3700
_____________________________________________________________________________
Question (42):
Over a period of 10 years, an investor deposits $1500 at the end of each year in a savings account
that pays 8% interest, compounded quarterly.
(42) The amount available in his account immediately before the 10th deposit is close to:
a) $20,500 b) $19,500 c) $21,000 d) $20,000
______________________________________________________________________________
Questions (43-44):
An engineer wants to purchase a house for $100,000 and has $20,000 cash to use as the down
payment. The bank offers a loan for the remainder at 6% nominal interest with the term of the
loan being 20 years.
(43) Assuming the payment is the same for all months, the monthly loan payment is close to:
a) $6976 b) $353 c) $500 d) $573
Questions (45-48):
Willis and Gouw manufacturing company produces PVC pipes and drainage ducts for use in the
agriculture industry. The table below shows a list of the major equipment currently owned by the
company and current book value.
(45) The companys undepreciated capital cost at the beginning of the current year is close to:
a) $114,700 b) $294,000 c) $291,060 d) $186,000
(46) The total depreciation deduction permitted at the end of the current year is close to:
a) $2,940 b) $265,700 c) $114,700 d) $28,300
(47) If the company purchases a second forklift for $12,000 at the beginning of next year, the
depreciation deduction for asset class 38 at the end of next year is close to:
a) $7,800 b) $4,740 c) $6,000 d) $3,600
(48) Considering the purchase of the 2nd forklift, the book value of the companys assets at the
end of next year is close to:
a) $244,485 b) $242,669 c) $288,149 d) $254,900
______________________________________________________________________________
Question (49)
The cost of a medium sized lathe in 2006 was $18,450. The Industrial Equipment Price Index in
2006 was 125. If the current price index is 174, the estimated cost of a similar size lathe is close
to:
Question (50)
At the beginning of 2004, your company purchased 15 tons of raw materials for $320,000. In
January 2013, the same 15 tons of raw materials cost $385,000. The average inflation rate over
this period is close to:
Questions (51-56):
PARC Co. has asked you to recommend a new nutcracker machine. After months of hard
research, you have collected the following data:
Discussions with the accounting department reveal that a loan must be secured to purchase any
machine. The loan data are as follows:
The loan payments will be made annually with 12% interest. PARC Co. assumes MARR = 15%.
Using the Net Present Worth (NPW) analysis, answer the following questions:
(51) The analysis period if you are going to use NPW is close to:
a) 24 years b) 21 years c) 12 years d) 18 years
(52) The interest rate that you are going to use in the calculation is:
a) 12% b) 15% c) 30% d) 13%
(53) The NPW for KRAX type, using only 6 years cash flow, is close to:
a) $40,500 b) $15,500 c) $11,000 d) $10,110
(54) The NPW for SPLIT-NUT type, using only 9 years cash flow, is close to:
a) $10,500 b) $12,500 c) $11,200 d) $10,100
(55) The NPW for KRAX type, in the analysis period, is close to:
a) $10,510 b) $65,300 c) $61,900 d) $14,250
Learning curve: TN = T1 Nb
12% Find F Find P Find A Find A Find F Find P Find A Find P 12%
Given P Given F Given F Given P Given A Given A Given G Given G
n F/P P/F A/F A/P F/A P/A A/G P/G n
1 1.120 0.8929 1.0000 1.1200 1.000 0.893 0.000 0.000 1
2 1.254 0.7972 0.4717 0.5917 2.120 1.690 0.472 0.797 2
3 1.405 0.7118 0.2963 0.4163 3.374 2.402 0.925 2.221 3
4 1.574 0.6355 0.2092 0.3292 4.779 3.037 1.359 4.127 4
5 1.762 0.5674 0.1574 0.2774 6.353 3.605 1.775 6.397 5
6 1.974 0.5066 0.1232 0.2432 8.115 4.111 2.172 8.930 6
7 2.211 0.4523 0.0991 0.2191 10.089 4.564 2.551 11.644 7
8 2.476 0.4039 0.0813 0.2013 12.300 4.968 2.913 14.471 8
9 2.773 0.3606 0.0677 0.1877 14.776 5.328 3.257 17.356 9
10 3.106 0.3220 0.0570 0.1770 17.549 5.650 3.585 20.254 10
11 3.479 0.2875 0.0484 0.1684 20.655 5.938 3.895 23.129 11
12 3.896 0.2567 0.0414 0.1614 24.133 6.194 4.190 25.952 12
13 4.363 0.2292 0.0357 0.1557 28.029 6.424 4.468 28.702 13
14 4.887 0.2046 0.0309 0.1509 32.393 6.628 4.732 31.362 14
15 5.474 0.1827 0.0268 0.1468 37.280 6.811 4.980 33.920 15
16 6.130 0.1631 0.0234 0.1434 42.753 6.974 5.215 36.367 16
17 6.866 0.1456 0.0205 0.1405 48.884 7.120 5.435 38.697 17
18 7.690 0.1300 0.0179 0.1379 55.750 7.250 5.643 40.908 18
19 8.613 0.1161 0.0158 0.1358 63.440 7.366 5.838 42.998 19
20 9.646 0.1037 0.0139 0.1339 72.052 7.469 6.020 44.968 20
ENGR 301/4 R & SS: Engineering Management Principles and Economics Page 13 of 13
Final Exam (May 2014) Instructors: Drs. G.J. Gouw & Z. Zhu
20% Find F Find P Find A Find A Find F Find P Find A Find P 20%
Given P Given F Given F Given P Given A Given A Given G Given G
n F/P P/F A/F A/P F/A P/A A/G P/G n
1 1.200 0.8333 1.0000 1.2000 1.000 0.833 0.000 0.000 1
2 1.440 0.6944 0.4545 0.6545 2.200 1.528 0.455 0.694 2
3 1.728 0.5787 0.2747 0.4747 3.640 2.106 0.879 1.852 3
4 2.074 0.4823 0.1863 0.3863 5.368 2.589 1.274 3.299 4
5 2.488 0.4019 0.1344 0.3344 7.442 2.991 1.641 4.906 5
6 2.986 0.3349 0.1007 0.3007 9.930 3.326 1.979 6.581 6
7 3.583 0.2791 0.0774 0.2774 12.916 3.605 2.290 8.255 7
8 4.300 0.2326 0.0606 0.2606 16.499 3.837 2.576 9.883 8
9 5.160 0.1938 0.0481 0.2481 20.799 4.031 2.836 11.434 9
10 6.192 0.1615 0.0385 0.2385 25.959 4.192 3.074 12.887 10
11 7.430 0.1346 0.0311 0.2311 32.150 4.327 3.289 14.233 11
12 8.916 0.1122 0.0253 0.2253 39.581 4.439 3.484 15.467 12
13 10.699 0.0935 0.0206 0.2206 48.497 4.533 3.660 16.588 13
14 12.839 0.0779 0.0169 0.2169 59.196 4.611 3.817 17.601 14
15 15.407 0.0649 0.0139 0.2139 72.035 4.675 3.959 18.509 15
16 18.488 0.0541 0.0114 0.2114 87.442 4.730 4.085 19.321 16
17 22.186 0.0451 0.00944 0.2094 105.931 4.775 4.198 20.042 17
18 26.623 0.0376 0.00781 0.2078 128.117 4.812 4.298 20.680 18
19 31.948 0.0313 0.00646 0.2065 154.740 4.843 4.386 21.244 19
20 38.338 0.0261 0.00536 0.2054 186.688 4.870 4.464 21.739 20