Chemical Engineering Plant Economics problems
- 1. The ratio of gross annual sales to the fixed capital investment is termed as the __________ ratio.
Options- A. cash reserve
- B. capital
- C. turnover
- D. investment Discuss
Correct Answer: turnover
- 2. Chemical engineering plant cost index is used for finding the present cost of a particular chemical plant, if the cost of similar plant at some time in the past is known.
The present cost of the plant = original cost x
The most major component of this cost index is
Options- A. fabricated equipment and machinery.
- B. process instruments and control.
- C. pumps and compressor.
- D. electrical equipments and material. Discuss
Correct Answer: fabricated equipment and machinery.
- 3. Profit is equal to revenue minus
Options- A. book value
- B. total cost
- C. operating cost
- D. none of these Discuss
Correct Answer: total cost
- 4. Generally, income taxes are based on the
Options- A. total income
- B. gross earning
- C. total product cost
- D. fixed cost Discuss
Correct Answer: gross earning
- 5. Functional depreciation of an equipment is the measure of decrease in its value due to its
Options- A. ageing
- B. wear and tear
- C. obsolescence
- D. breakdown or accident Discuss
Correct Answer: obsolescence
- 6. 'Lang factor' is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of 'Lang factor' for fixed capital investment, for a solid-fluid processing chemical plant ranges from
Options- A. 1.2 to 1.4
- B. 2.5 to 2.7
- C. 4.2 to 4.4
- D. 6.2 to 6.4 Discuss
Correct Answer: 4.2 to 4.4
- 7. Pick out the correct statement.
Options- A. Difference between income and expense is termed as gross revenue.
- B. Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date.
- C. Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment.
- D. Scrap value is the net amount of money obtainable from the sale of used property over and above any charges involved in its removal & sale. Discuss
Correct Answer: Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date.
- 8. Depreciation
Options- A. costs (on annual basis) are constant when the straight line method is used for its determination.
- B. is the unavoidable loss in the value of the plant, equipment and materials with lapse in time.
- C. does figure in the calculation of income tax liability on cash flows from an investment.
- D. all (a), (b) and (c). Discuss
Correct Answer: all (a), (b) and (c).
- 9. Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method?
Options- A. Multiple straight line method
- B. Sinking fund method
- C. Declining balance method
- D. Sum of the years digit method Discuss
Correct Answer: Sinking fund method
- 10. Which of the following is not a component of the working capital for a chemical process plant?
Options- A. Product inventory.
- B. In-process inventory.
- C. Minimum cash reserve.
- D. Storage facilities. Discuss
Correct Answer: Storage facilities.
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