1(a) Why do economic projections for a future event tend to vary more widely than engineering estimates for performance for a new design? (4 Marks)

(b) Write a note on time-value equivalence. (6 Marks)

(c) Differentiate between simple interest and compound interest with examples. (6 Marks)

(d) A loan of $200 is made for a period of 13 months, from January 1 to January 31 the following year, at a simple interest rate of 10%. What future amount is due at the end of the loan period? (4 Marks)

2(a) Write notes on valuation and future worth. (6 Marks)

(b) What is equivalent annual cost? Explain. (4 Marks)

(c) Explain the term perpetual life. (4 Marks)

(d) The lease on a commercial complex amounts to $10000 per month for 10 years. If payments are made on the first of each month, what is the present worth of the agreement at a nominal annual interest rate of 14%, compounded monthly? (6 Marks)

3(a) Explain the method of calculation of internal rate of return. (6 Marks)

(b) Write a note on classification of alternatives. (5 Marks)

(c) Write a note on obsolescence forced by competition. (4 Marks)

(d) A $5000 bond matures in 10 years and pays 2.5% interest twice a year. If the bond sold for $5050, what is the actual investment rate? (5 Marks)

4(a) Mention some importance irregularities in benefit/cost comparisons. Explain in detail. (10 Marks)

(b) Explain the method of dettermination of simulation in fighter pilot training. (6 Marks)

(c) A public good has a linear demand function such that the first unit available is valued at $100000, but when 50000 units are available, the per-unit value drops to $2. What is consumer's surplus when the demand is 30000 units? (4 Marks)

5(a) Explain straight line method of computing depreciation charges. (6 Marks)

(b) Write a short note on MACRS depreciable property. (6 Marks)

(c) What is effective income tax?(4 Marks)

(d) An asset with a tax life of 5 years was purchased 3 years ago at a cost of $10000. It now has a book value of $5000 based on MACRS straight line depreciation. If it is sold for $1000, what is its expected tax life? (4 Marks)

6(a) Explain the impact of inflation on economic valuations and stock market. (8 Marks)

(b) What are the different types of leases? (4 Marks)

(c) What is single parameter sensitivity? (4 Marks)

(d) An asset can be purchased for $80000 and will have a 10-year useful life. A suggested lease arrangement is to pay rental charges of $28000 for the first 4 years and then make annual payments of $1500 for the remaining 6 years. evaluate the suggestion. (4 marks)

7(a) Mention the basic concepts in break-even analysis. (8 Marks)

(b) What is dumping? (4 Marks)

(c) Define expected value. (4 Marks)

(d) What are acceptable investment diagrams. explain. (4 Marks)

8(a) Explain Monte Carlo simulation. (6 Marks)

(b) What is Bayesian analysis. Explain. (5Marks)

(c) Explain the procedures involved in attribute weighting. (5 Marks)

(d) Explain attribute value assessment. (4 Marks)

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