EPM 201 ENGINEERING ECONOMY
SEM I 2021/2022
Individual Assignment (5%)
Instruction
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Q1.
Answer should be handwritten and submitted as pdf file.
Due 11th February 2022 (FRIDAY) by 5:00 PM.
KXX International is considering two mutually exclusive alternatives (MEAs) with
equal lives for implementing an automated passenger’s check-in counter at its hub
airport. Machine B is technologically more advanced therefore expected to be more
versatile and effective than Machine A. Based on information in Table Q1, compare
the alternatives using MARR = 15%. Decide the economic selection based on
investment alternative. Discuss your selection.
Table Q1
Initial Cost (RM)
Annual
revenue
Machine A
Machine B
12,000
8,000
less 3,000
4,000
expenses (RM)
Useful life (years)
7
7
(30 marks)
Q2.
A 20 years old air conditioning system in USM’s auditorium costs at RM 400,000 when
first installed. The system was design to last for 30 years, with the salvage value at 10%
of its initial cost. Calculate the allowable depreciation charge per year using 5 years
straight line (SL) method. Then, calculate its current book value (BV).
(30 marks)
Q3.
FLB Sdn Bhd plans to changes their compressor and as the engineer in charge, you will
be conducting analysis using the information in Table Q3. Determine whether the old
compressor should be replaced or not. Defence your decision.
Table Q3
Information
Defender
Challenger
Initial Price (RM)
0
120,000
Current MV (RM)
30,000
0
0
50,0000
60,000
30,000
MV after 5 year (RM)
Annual Operating &
Maintenance costs (RM)
Before-tax MARR is set at 20% per year.
The study period is 5 years.
(40 marks)
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