Chemical Engineering Plant Economics problems
- 1. 'P' is the investment made on an equipment, 'S' is its salvage value and 'n is the life of the equipment in years. The depreciation for rath year by the sum-of years digit method will be
Options- A.
- B.
- C.
- D.
Discuss
Correct Answer:
- 2. Out of the following, the depreciation calculated by the __________ method is the maximum.
Options- A. diminishing balance
- B. straight line
- C. sum of the years digit
- D. sinking fund Discuss
Correct Answer: diminishing balance
- 3. 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
Correct Answer: 20 to 30
- 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
Correct Answer: repair and maintenance charges.
- 5. 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
Correct Answer: 800
- 6. '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
Correct Answer: equipment cost by scaling.
- 7. 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
Correct Answer: is the length of time over which the earnings on a project equals the investment.
- 8. 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. Discuss
Correct Answer: does not measure the discounted rate of return.
- 9. 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
Correct Answer: book value at the end of (n - 1)th year,
- 10. 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
Correct Answer: Plates with butt welded joints are less expensive compared to lap welded joints, because squaring of plates is not necessary.
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