Project ForgePlant Design & Economics
Cost Estimation
GATE 2013
Medium
The purchase cost of a heat exchanger of 20 m² area was Rs. 500000 in 2006. What will be the estimated cost (in Rs. to the nearest integer) of a similar heat exchanger of 50 m² area in the year 2013? Assume the six-tenths factor rule for scaling and the cost index for 2006 as 430.2. The projected cost index for the year 2013 is 512.6.
1032400 Rs(± 3000 accepted)
Explanation
Scale by size using the six-tenths rule, then adjust for inflation using the cost index ratio: Cost2013=500000×(50/20)^0.6×(512.6/430.2)=500000×1.7329×1.1915≈1,032,400 Rs.
Source: GATE CH 2013 (2013)
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