LUNIVERSITI TEKNOLOGI MALAYSIA UNIVERSITI TEKNOLOGI MALAYSIA FINAL EXAMINATION SEMESTER Il, SESSION 2017/2018 COURSE NAME : PROCESS ECONOMICS & PROJECT MANAGEMENT COURSE CODE : SMJC 3123 LECTURERS : DR. ROSHAFIMA BINTI RASIT ALI DR. LIEW PENG YEN PROGRAMME : SMJC DATE + 30 MAY 2018 TIME : 2 HOURS 30 MINUTES INSTRUCTION : ANSWER ALL FOUR (4) QUESTIONS (THIS QUESTION PAPER CONSISTS OF 8 PRINTED PAGES INCLUDING THIS PAGE)SMJC 3123 Answer All Questions QUESTION 1 (15 marks) WWS Engineering, a company specializes in odor control for wastewater treatment plants, made deposits of RM 100,000 now. After the first deposit, RM 25,000 is deposited semi-annually for 2 years. Then, RM30,000 is deposited annually for the next 2 year. Assume i=16% per year, compounded quarterly. (a) Determine the effective annual interest rate and effective interest rate for semiannual period (3 marks) (PLOU/C3) (b) Draw the cash flow diagram and determine the future worth after 4 years of the deposits. (12 marks) (PLOU/C3) QUESTION 2 (25 marks) (@) —_MIIIT manufactures toy construction blocks. The company is considering three methods for producing special-purpose construction parts. Method I will have an initial cost of $200,000, annual operating cost of $120,000 and a life of 3-year. Method 2 will have an initial cost of $400,000, annual operating cost of $160,000 and a life of 6-year-Method 3 will have an initial cost of $300,000, annual operating cost of $120,000, which increases gradually with $15,000 per year until the end of 6-yearlife. Assume 10% of salvage values for bet®'methods and i=15% per year. Which method should the company select on the basis of present worth analysis? (17 marks) (PLOIC4) (6) A stockbroker claims an ability to consistently eam 12% per year on an investor's money. A client invests $10,000 now, $30,000 for year 1 to 3, and $8,000 continuously for an unspecified time into the future. Calculate the capitalized cost of the client’s investments? (8 marks) (PLOWC4) ewSMJC 3123 QUESTION 3 (25 marks) ring buying a crane for the next bridge project in (@) Jaya Building contractor is consider " as shown in Table Q3. Using rate of return analysi ‘Nusajaya, Johor from these two alternatives with a MARR of 7%, determine; Table Q3 Grae Crane BE TpiiarGonsSCSC~«SOSCS OO Uniform Annual Benefits,$ 1750 1650 Useful Life, years 8 4 a (Internal rate of return (ROR) for each alternatives and evaluate the alternatives as independents projects. Give your reason. (G marks) (PLOI/C4) Gi) If only one crane is to be purchased, determine which should be selected. Give your reason, (8 marks) (PLOI/C4) (Use PW-based analysis rate of return equation) (b) Anengineering Consulting firm can purchase a fully configured Computer-Aided Design (CAD) workstation for $20,000. It is estimated that the useful life of the workstation is seven years, and its market value in seven years should be $2,000. Operating expenses are estimated to ‘be $40 per eight-hour workday, and maintenance will be performed under contract for $8,000 per year. The effective income tax rate is 40%. Using a straight-line depreciation, determine how many workdays per year must the workstation be needed to justify leasing it? (9 marks) (PLOUIC4) QUESTION 4 (35 marks) (@) Define a project and list five (5) characteristics which help differentiate projects from other functions carried out in the daily operations of the organization? (4 marks) (PLOUCS)