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Project Engineering

GATE – 1990

19(ii) For a project having a life of ten years the following cash flow pattern is expected,

End of years Net cash flow (Rs.)

0 -50,00,000

1 – 10 20,00,000

10 -1,50,00,000

If the expected interest rate is 20 percent, what is your recommendation about implementing the
project?

GATE – 1991

10(ii). Choose the correct answer:


(a). A standard type of heat exchanger with a negligible scrap value costs Rs. 40,000 and will have

a useful life of 6 years. Assuming effective compound interest of 10% per year. The capitalized cost

of a heat exchanger will be,

(A) Rs. 60,880;

(B) Rs. 90,880;

(C) Rs. 91,880;

(D) Rs. 81,880;

Capitalized cost = [(1+i)^n/{(1+i)^n-1}]xP =[1.1^6/{1.1^6-


1}]*40000=91843/=

(b). A reactor having a salvage value of Rs. 10,000 is estimated to have a service life of 10
years. The annual interest rate is 10%. The original cost of the reactor was Rs. 80,000.
The book value of the reactor after 5 years using sinking fund depreciation method will
be,

(A) Rs. 40,096;

(B) Rs. 43,196;

(C) Rs. 53,196;

(D) Rs. 60,196

(c). The total capital investment for a chemical plant is Rs. 1,000,000 and the working capital
is Rs. 100,000. If a turnover ratio is 1, the gross annual sales will be,
(A) Rs. 800,000

(B) Rs. 900,000

(C) Rs. 1,000,000

(D) Rs. 1,100,000

20(ii). A heat exchanger with an initial investment of Rs. 300,000 has a 6 years life. How much
can be spent on an improved design which has a life of 12 years and is expected to save
Rs. 10,000 per year? Annual compound interest rate is 8%.

GATE – 1992

10(d). Match the following:


(I). Capitalized cost. (A). Comparing alternative investment choices.

(II). Unmortized value. (B). Updating cost data of equipment.

(III). Payout period. (C). Profitability evaluation.

(IV). Cost index. (D). Cost accounting.

(E). Replacement decisions.

(F). Working capital.

(I). Capitalized cost. (A). Comparing alternative investment choices.

(II). Unmortized value. (E). Replacement decisions.

(III). Payout period. (C). Profitability evaluation.

(IV). Cost index. (B). Updating cost data of equipment.

20 (c). The plant of chemical company has an initial worth of Rs. 50 lakhs, and an estimated salvage

value of Rs. 2 lakhs in a service life of 8 years.

(i). Given a choice between the straight-line and declining-balance methods of

depreciation. Which method would you recommended to save tax and why?

(ii). Estimate the book value of the plant at the end of 4 years for each of the two methods

of depreciation.
GATE – 1994

27. (a). The cost of blower in 1980 is Rs. 2,000.

(i). What is the cost of the blower in 1988 with the same capacity? The cost index for the blower
in 1980 and 1988 is respectively 250 and 300.
(ii). What is the cost of a blower in 1980 with double the capacity?

(b). If the delivered costs of equipment of a fluid processing plant are Rs. 4 x 106, what is the
capital cost of the plant?
GATE – 1997

28. For a chemical plant, the fixed capital investment is Rs 4 x 109 and the working capital is 20% of
the total capital investment. The annual total product costs are Rs 2 x 109 whereas the annual
depreciation costs are Rs 2 x 108. If the total annual sales are Rs 3 x 109 and the income-tax rate is
40%, then determine –
(a) The percent of total capital investment returned annually as gross profit.
(b) The pay-out time, Neglect start-up costs.

GATE – 1999
1.29 In a manufacturing industry, break-even point occurs when

A. the total annual rate of production equals the assigned value,

B. the total annual product cost equals the total annual sales,

C. the annual profit equals the expected value,

D. the annual sales equals the fixed costs,

2.19 Each of the methods given in the left-hand column is closely linked to one of the items listed in
the right-hand column. Match each method with the corresponding item.

I) Discounted cash flow, A) 2. Depreciation,

II) Declining balance, B) 1. Payout period,

C) Profitability analysis,

D) Solvage value,

E) Annuity,

F) Working capital,
21. A new equipment made of material A costs, post installation, Rs. 3 lakhs and is expected to
have a scrap value of 10% of this cost at the end of a useful life of 10 years. Similar equipment
made of material B costs Rs. 1.5 lakhs, but is likely to have no scrap value. Assume that both
types of the equipment could be replaced at a cost that is 20% more than the original value. On
the basis of equal capitalised costs for both types of the equipment, estimate what should be the
useful life for equipment made of material B. The company has to pay an annual interest on the
investment at a rate of 15%.

GATE – 2000

1.29 For a typical project, the cumulative cash flow is zero at the

(A) end of the projct life

(B) break even point

(C) start up

(D) end of the design stage

12. A plant is designed to produce 1.2 x 108 kg/yr of an agrochemical. The estimated fixed
capital investment is Rs 1.5 x 109. The working capital is Rs. 2 x 108 and the start-up cost (only
in the first year of commissioning and to be accounted for in the first year) is Rs. 1.5 x 108. The
following cost data are available :

Raw materials : Rs 0.80/kg product.

Labour and utilities, etc. : Rs. 0.27/kg product.

Selling price of product : Rs. 10/kg.


Other costs (on per year basis) including maintenance, insurance, etc. @ 10% of fixed capital.

Indirect costs of administration, R & D, marketing, etc. @ 20% of sale proceeds.

The plant will be fully depreciated over a period of 5 years using the straight-line method. The
rate of income tax is 40%. Calculate

i. the net profit at the end of first year,


ii. the pay-out period,

GATE – 2004
Q. 83-84 are based on the data supplied in the paragraph below

Fixed capital investment for a chemical plant is Rs. 40 million with an estimated useful life of
6 years and a salvage of Rs. 4 million. The rate of interest is 15%. Tax is 25% of the annual
taxable income. In the first year of operation, the income from sales is Rs. 20 million and
manufacturing expenses are Rs. 5 million. The plant depreciates on a straight line basis.

83. The rate of return on investment is given by

(A) 50% (B) 37.5% (C) 32% (D) 20%


84. The net present value (NPV) in million Rs. At the start and at the end of the first year of
operation is respectively given by

(A) zero and –28.9 (B) –40 and –28.9

(C) –40 and 12.75 (D) zero and 12.75

GATE – 2005
28. For a solid processing plant, the delivered equipment cost is Rs. 10 lakhs. Using Lang
multiplication method, the total capital investment, in lakhs of rupees, is
(a) 46 (b) 57

(c) 100 (d) 200

28. Lang multiplication factor is used for estimation of fixed-capital investment or

total capital investment

Fixed-capital investment or total capital investment.= Lang multiplication factor × delivered


equipment cost

Lang multiplication factor for different cases:

Type of plant Fixed-capital Total capital


investment investment
Solid-processing 3.9 4.6
plant
Solid-fluid- 4.1 4.9
processing plant
Fluid-processing 4.8 5.7
plant

Ref: Plant Design and Economics for Chemical Engineers - Peters & Timmerhaus, McGraw-Hill

Therefore for this problem Lang multiplication factor will be 4.6 and the total capital investment will
be 46 lak

29. The cost of a drum dryer is Rs. 10 lakhs. The cost of a drum dryer with double the surface
area in lakhs of rupees is

(a) 2 x 10 (b) 30.6 x 10

(c) 50.6 x 10 (d) 20.6 x 10

Using the six-tenths rule:


Therefore the cost of drum dryer with double the surface area is 20.6x10 lakhs

(d) is the correct answer

30. The cost of a distillation column in the year 2000 is x rupees. What is the cost of the column
is rupees in the year 2010 given the cost indices for the years 2000 and 2010 are 480 and 520
respectively ?

(a) (520/480)2 x (b) (480/520) x

(c) (520/480) x (d) (520/480)0.6 x

30. To predict the present cost data from the cost data of previous years

( c ) is the correct answer

72. The original value of an equipment is Rs. 10000/-. The salvage value is Rs. 500/- at the end
of its useful life period of 5 years. What is the asset value is rupees after two years by textbook
declining balance method ?

(a) 3025/- (b) 4010/-

(c) 5020/- (d) 6050/-


73. The depreciable fixed cost is Rs. 100 lakhs. The average profit per year is Rs. 15 lakhs. The
average depreciation cost per year is Rs. 10 lakhs. What is the payout period in years, if there is
no interest charge ?

(a) 8 (b) 4

(c) 10 (d) 20

100 lakhs/((15+10) lakhs= 4 yrs

Option (b) is the correct answer


GATE – 2006
60. In a desalination plant, an evaporator of area 200 m2 was purchased in 1996 at a cost of
$3,00,000. In 2002, another evaporator of area 50 m2 was added. What was the cost of the
second evaporator (in $)? Assume that the cost of evaporators scales as (capacity)0.54. The
Marshall land Swift index was 1048.5 in 1996 and 1116.9 in 2002.

(A) 1,30,500 (B) 1,39,100 (C) 1,41,900 (D) 1,51,200


62. Due to a 20% drop in the product selling price, the pay-back period of a new plant increased
to 1.5 times that estimated initially, the production cost and the production rate remaining
unchanged. If the production cost is Cp and the new selling price is Cs, then Cp/Cs is

(A) 0.2 (B) 0.4 (C) 0.5 (D) 0.6


63. Obtain the optimal diameter of a cylindrical storage vessel of volume V. The curved shell
costs Cs (in $/m2), and the flat top and bottom plates cost Cp (in $./m2)
64. A sale contract signed by a chemical manufacturer is expected to generate a net cash flow of
$ 2,50,000 per year at the end of each year for a period of three years. The applicable discount
rate (interest rate) is 10%. The net present worth of the total cash flow is $.
(A) 7,50,000 (B) 6,83,750 (C) 6,21,500 (D) 3,32,750

GATE – 2007
65. A pump has an installed cost of Rs. 40,000 and a 10-year estimated life. The salvage value of
the pump is zero at the end of 10 years. The pump value (in rupees) after depreciation y the double
declining balance method, at the end of 6 years is

A) 4295 B) 10486 C) 21257 D) 37600


GATE – 2008

18. For the case of single lump-sum capital expenditure of Rs. 10 crores which generates a constant
annual cash flow of Rs. 2 crores in each subsequent year, the payback period (in years), if the scrap
value of the capital outlay is zero is
A) 10 B) 20 C) 1 D) 5
18. For the case of single lump-sum capital expenditure of Rs. 10 crores which generates a constant
annual cash flow of Rs. 2 crores in each subsequent year, the payback period (in years), if the scrap
value of the capital outlay is zero is
D) 5 (10 crores/2 crores) (Correct answer)

19. The relation between capital rate of return ratio (CRR), net present value (NPV) and maximum
cumulative expenditure (MCE) is

66.A reactor has been installed at a cost of Rs. 50,000 and is expected to have a working life of 10
years with a scrap value of Rs. 10,000. The capitalized cost (in Rs.) of the reactor based on an annual
compound interest rate of 5% is
A) 1,13,600 B) 42,000 C) 52,500 D) 10,500
GATE – 2009

18. The total fixed cost of a chemical plant is Rs. 10.0 lakhs; the internal rate of return is 15%
and the annual operating cost is Rs. 2.0 lakhs. The annualized cost of the plant (in lakhs of
Rs.) is

(A) 1.8 (B) 2.6 (C) 3.5 (D) 4.3


45. A column costs Rs. 5.0 lakhs and has a useful life of 10 years. Using the double declining
balance depreciation method, the book value of the unit at the end of five years (in lakhs of
Rs.) is

(A) 1.21 (B) 1.31 (C) 1.64 (D) 2.05


Design of Process Equipment

GATE – 2009
47. Match the equipment in Group I to the internals in Group II.

GROUP I GROUP II

P. Centrifugal pump 1. Baffle

Q. Distillation column 2. Impeller

R. Heat exchanger 3. Tray

4. Volute

(A) P-2, Q-1, R-4 (B) P-2, Q-4, R-3

(C) P-1, Q-3, R-4 (D) P-4, Q-3, R-1

GATE – 2008
11.To determine the performance of a compressor, a standardized test is performed. In the testing
process,when the compressor is under operation, “shut off’ term signifies

A) maximum flow B) zero flow,

C) steady flow, D) intermittent flow


37. A cylindrical vessel with hemispherical ends is filled with water as shown in the figure. The head
space is pressurized to a gauge pressure of 40 kN/m2. The vertical forces F (in kN) tending to lift the
top dome and the absolute pressure P (in kN/m2) at the bottom of the vessel are (g = 9.8 m/s2,
density of water = 1000 kg/m3)

A) F = 83.6 ; P = 64.5 B) F = 83.6 ; P = 165.8

C) F = 125.7 ; P = 64.5 D) F = 125.7 ; P = 165.8


67. In a shell and tube heat exchanger, if the shell length is LS, the baffle spacing is LB and the thickness
of baffle is tb, the number of baffles on the shell side, NB, is

GATE – 2007
17. Select the most appropriate pump from Group 2 to handle each fluid flow given in Group
1,

Group 1 Group 2

P. Highly viscous fluid flow (1) piston pump

Q. Fluid containing large amount of abrasive solids (2) gear pump

(3) plunger pump

(4) centrifugal pump

A) P-(2), Q-(1) B) P-(2), Q-(4)

C) P-(3), Q-(4) B) P-(4), Q-(3)

18. A cylindrical storage tank can have a self-supported conical roof,

A. if its diameter is less than 20 m

B. if its diameter is more than 50 m

C. if the thickness of the roof is more than that of the cylindrical shell

D. whatever is the diameter


GATE – 1993

9(a). The important stresses induced in the shell of tall vertical vessels are,
(A). __________________;
(B). __________________;
(C). __________________;
(D). __________________

For tall vertical vessels (typical examples are fractionating columns, absorbers, tubular reactors,
chimneys, stacks etc.) the height to diameter ratio is very large. The stresses to be considered (in
order of importance) for these tall vessels are:

a. Circumferential stress , radial stress and axial stress due to internal pressure or vacuum
inside the vessels
b. Compressive stress due to dead load of the vessel , contents and attached instruments,
insulation
c. Tensile or compressive stress induced due to the wind load
d. Stress due to unsymmetrical load distribution (of pipes and platforms etc.)
e. Stress due to torque induced along the longitudinal axis resulting from offset piping and
wind load
f. Stress resulting from seismic force
g. Residual stress due to fabrications (bending, cutting welding etc.)

9(b). The tensile stresses resulting from internal pressure are,

(i). _____________ expressed as ____________ and


(ii). _____________ expressed as ____________.
The tensile stresses resulting from internal pressure are,

(i). Circumferential tensile stress expressed as and


(ii). Axial tensile stress expressed as

Where P is the internal pressure, D is the diameter of the vessel and t is the thickness of the
vessel.

10(a). A cylindrical shell under external pressure tends to ___________ as a result of external
radial pressure. The external pressure at which buckling occurs depends upon ______________,
_____________ and __________ when the length of the shell is less than the critical
length .

A cylindrical shell under external pressure tends to buckle as a result of external radial pressure.
The external pressure at which buckling occurs depends upon modulus of
elasticity, thickness of the shell and diameter of the shell when the length of the
shell is less than the critical length

10(b). Match the following:

(I). Gasket. - (A). External support.


(II). Anchor bolts. - (B). Flange joints.
(III0. Skirt. - (C). Foundation.

(IV). Guy wire. - (D). Base support.

(I). Gasket. - (B). Flange joints

(II). Anchor bolts. - (C). Foundation.


(III0. Skirt. - (D). Base support.
(IV). Guy wire. .- (A). External support.

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