Alangilan Campus
College of Engineering – Department of Mechanical Engineering
SPECIAL EXAMINATION
Second Semester, AY 2023- 2024
Course Code
ENGG 404
Course Title
ENGINEERING ECONOMICS
Section
Date
Time
SR-Code
Name of Student
Instructions to Students
1. Answer questions logically and legibly. Avoid
ILOs
erasures.
2. Show your complete solution with CASH FLOW
DIAGRAM. ROUNDING OFF INTO TWO
2
DECIMAL PLACES.
3. Start each question on a separate page. Do not write
at the back of the answer sheet.
4. This paper is in ONE (1) section(s) only
3
NO. SECTIONS
POINTS
1.
Multiple Choices
2.
Essay/Short Answer
3.
Problem Solving
100
4
Others
TOTAL POINTS
100
5. Use pen and BOX your final answers in your solution.
6. This is a closed book examination; no notes are permitted.
GCH Alangilan, Batangas City, Philippines
+63 43 425 - 0139 loc. 2121
www.batstate-u.edu.ph
ceafa@g.batstate-u.edu.ph
Questions
Points
Alangilan Campus
College of Engineering – Department of Mechanical Engineering
Test: (Mapped to ILO2 / ILO3)
Instructions: Read, analyze, and solve the following problems carefully. Make sure to show all
work. An answer with no supporting work will be graded with a zero.
Note: Present your solutions clearly and logically on the blank sheet provided. (REQUIRED)
Avoid erasures.
Problem 1: (30pts)
A local company assembling air conditioners produces 300 units per month at a cost of Php800.00
per unit. Each air conditioner sells for Php1,200.00. If the company makes a profit of 10% on its
shares with a par value of Php200.00 per share and the total fixed costs are Php20,000 per month.
What is the break even point? (20pts)
How much is the loss or profit if only 100 units are produced and sold in a given month? (10pts)
Problem 2: (30pts)
The Atlantic Gulf and Co. is engaged in the business of renting construction equipment to
constructors. The company bought a bulldozer 5 years ago at a cost of Php30,000.00 and at that
time it was believed to have a life of 10 years. The equipment was rented on the average of 1600
hours a year and its annual maintenance cost for repairs is Php2,000.00. If rents for Php1o per hour
without the operator. If it is sold now the cost it will bring is Php10,000.00. A new bulldozer is
now available for Php38,000.00 which may be rented to contractors at Php12 an hour and which
it is believed, will be able to give service annually for 2000 hours. Maintenance cost on this
GCH Alangilan, Batangas City, Philippines
+63 43 425 - 0139 loc. 2121
www.batstate-u.edu.ph
ceafa@g.batstate-u.edu.ph
Alangilan Campus
College of Engineering – Department of Mechanical Engineering
equipment is Php1,500.00. If this bulldozer is bought, its value will be written off in 5 years. Taxes
and insurance would be 3% of the first cost in each case. If the company desires a minimum profit
of 8% on its investment, should the present bulldozer be replaced? If so what is rate of return on
the additional investment?
Problem 3: Mapped to ILO3 (30pts)
In building highway, the district engineer is faced with the alternatives of building at a 4
lane underpass that would take care of all future needs of building, a two lane underpass now and
second 2-lane underpass 20 years later. The 4-lane underpass would cost Php400,000.00 and has
a maintenance cost of Php10,000.00 per year during the 40 years it is expected an underpass will
be needed. The 2-lane underpass will cost Php270,000.00 each and each would have a maintenance
cost of Php8,000.00 per year. If financing cost are 5%, which alternative should be adopted and
compute the difference of its equivalent present worth.
Assume zero salvage value for each alternative at the end of 40 years.
Note: Use Present Worth Method
Problem 4: Mapped to ILO3 (10pts)
A corporation uses a type of motor truck which costs Php5,000.00 with life 2 years and
final salvage value of Php800.00. How much could the corporation afford to pay for another type
of truck of the same purpose whose life is 3 years with a final salvage value of Php1,000.00.
Take note that money is worth 4%.
GCH Alangilan, Batangas City, Philippines
+63 43 425 - 0139 loc. 2121
www.batstate-u.edu.ph
ceafa@g.batstate-u.edu.ph