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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
  • 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
  • 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
  • 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. 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
  • 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
  • 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
  • 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
  • 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
  • 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

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