Chapter 3, 4 and 5

Part – A

1. What is the basic equation used in the study of economic analysis of

alternatives?
2. What is called a present worth method?
3. What is called rate of return method?
4. What are the different methods used in the study of economics of selecting
alternatives?
5. When you can choose annual cost method and present worth method?
6. What is called a cyclic process?
7. Give few examples for batch, semi continuous and continuous operations.
8. How do you calculate the annual costs for cyclic operation?
9. List the different methods used to determine the value of process industry.
10. What is called appraisal value of a process industry?

Part – B

1. Describe alternative investment analysis in process industries.

2. Mention any three methods used to calculate profitability in alternative

investments. Explain one of them in detail.

3. An alternative investment on installation of two equipments in a process

industry based on two plans (Plan A and Plan B) as given below is considered.
Which plan has lowest equivalent capital requirement.
Data :
Particulars Plan A (Equipment 1) Plan B (Equipment 2)
Cost of the equipment $10,000 $30,000
Labor cost $18,600 $11,000
Annual direct cost 8% of investment 10% of investment cost
Money worth 10% 10%
Service life 10 years 10 years
Salvage value $600 $1000
Annual cost $19,400 $14,000

4. Describe the various types of operations involved in economic analysis of

cyclic processes.

5. A small-scale chemical industry produces an organic chemical by batch mode

of operation in which no product is drawn until the batch is finished. Each
cycle in the production process consists of operating time, which is necessary
to complete the reaction, plus an additional time of 1.4 h required for
discharging and charging. The operating time per cycle is mathematical
expressed as follows:
1.5Pb0.8, Rupees per annum.
 The operating cost during the operating period is Rs. 1000/h. The annual fixed
costs CF for the equipment vary with the size of batch in the following manner
CF = 340 Pb0.8 Rs/y Inventory and storage charges are neglected if necessary
the plant can be operated 24h/day for 300 days per annum. The annual
production is 106 kg of product. At this capacity, the raw material and
miscellaneous costs, other than those already mentioned, amounts to
1,30,00,000 per annum. Determine the cycle time for condition of minimum
cost per year.
6. Discuss the various values involved in analysis of a process plant.

7. Write short notes on

(a) Appraisal value
(b) Earning value
(c) Stock value and Bond value

8. With neat sketch summarize the checklist of information required in economic

analysis of proposed process plant.

*****