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  • Question
  • The payback method for the measurement of return on investment


  • Options
  • A. gives a correct picture of profitability.
  • B. underemphasises liquidity.
  • C. does not measure the discounted rate of return.
  • D. takes into account the cash inflows after the recovery of investments.

  • Correct Answer
  • does not measure the discounted rate of return. 


  • Chemical Engineering Plant Economics problems


    Search Results


    • 1. Payback period

    • Options
    • A. and economic life of a project are the same.
    • B. is the length of time over which the earnings on a project equals the investment.
    • C. is affected by the variation in earnings after the recovery of the investment.
    • D. all (a), (b) and (c).
    • Discuss
    • 2. 'Six-tenth factor' rule is used for estimating the

    • Options
    • A. equipment installation cost.
    • B. equipment cost by scaling.
    • C. cost of piping.
    • D. utilities cost.
    • Discuss
    • 3. A machine has an initial value of Rs. 5000, service life of 5 years and final salvage value of Rs. 1000. The annual depreciation cost by straight line method is Rs.

    • Options
    • A. 300
    • B. 600
    • C. 800
    • D. 1000
    • Discuss
    • 4. Fixed charges for a chemical plant does not include the

    • Options
    • A. interest on borrowed money.
    • B. rent of land and buildings.
    • C. property tax, insurance and depreciation.
    • D. repair and maintenance charges.
    • Discuss
    • 5. Cost of instrumentation in a modern chemical plant ranges from __________ percent of the total plant cost.

    • Options
    • A. 5 to 10
    • B. 20 to 30
    • C. 40 to 50
    • D. 60 to 70
    • Discuss
    • 6. The depreciation during the year 'n', in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage 'N' to the

    • Options
    • A. initial cost.
    • B. book value at the end of (n - 1)th year,
    • C. depreciation during the (n - 1)th year.
    • D. difference between initial cost and salvage value.
    • Discuss
    • 7. Pick out the wrong statement.

    • Options
    • A. Longer tubes are less expensive per unit heat transfer area as compared to shorter tubes.
    • B. A cost index is merely a number for a given year showing the cost at that time relative to a certain base year.
    • C. Turn over ratio of a chemical plant is the ratio of gross annual sales to the fixed capital investment.
    • D. Plates with butt welded joints are less expensive compared to lap welded joints, because squaring of plates is not necessary.
    • Discuss
    • 8. Pick out the wrong statement.

    • Options
    • A. Debt-equity ratio of a chemical company describes the lenders contribution for each rupee of owner's contribution i.e., debt-equity ratio = total debt/net worth.
    • B. Return on investment (ROI) is the ratio of profit before interest & tax and capital employed (i.e. net worth + total debt).
    • C. Working capital = current assets + current liability.
    • D. Turn over = opening stock + production closing stock.
    • Discuss
    • 9. The inventory of raw materials included in the working capital is usually about __________ months supply of raw materials valued at delivery prices.

    • Options
    • A. one
    • B. three
    • C. six
    • D. twelve
    • Discuss
    • 10. Personnel working in the market research group is reponsible for the job of

    • Options
    • A. equipment selection.
    • B. product evaluation.
    • C. equipment design.
    • D. cost estimation.
    • Discuss


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