Engineering Economy problems
- 1. Each financial ratio is generally compared by
Options- A. a past ratio calculated from the past financial standard of the firm.
- B. a ratio developed by using the projected financial statement of the firm.
- C. a ratio of some selected firms most progressive and successful at the point of consideration.
- D. All of these Discuss
Correct Answer: All of these
- 2. The sunk costs include :
Options- A. a past expenditure
- B. an unrecovered balance
- C. an invested capital that cannot be retreived
- D. All of these Discuss
Correct Answer: All of these
- 3. Pick up the correct statement from the following:
Options- A. The ratios which show profitability in relation to sales and those which show profitability in relation to investment, are called profitability ratios.
- B. The ratio of gross profit and net sales, is called profitability in relation to sales ratio.
- C. The ratio of net profit after taxes to total assests is known as profitability in relation to investment ratio
- D. All of these Discuss
Correct Answer: All of these
- 4. Which one of the following statements is correct?
Options- A. The number of years required to recover the initial cash investment in a project, is called Pay Back period (PBP).
- B. The discount rate that equates the present value of the expected Net Cash Flows (CFs) with the Initial Cash Outflow (ICO) is known as internal rate of return.
- C. The present value of the proposal's net cash flows, less the proposal's initial cash outflow is known as the Net Present Value (NPV)
- D. All of these Discuss
Correct Answer: All of these
- 5. In a cash flow series :
Options- A. uniform gradient signifies that an income or disbursement changes by the same amount in each interest period.
- B. Either an increase or a decrease in the amount of a cash flow is called the gradient.
- C. The gradient in the cash flow may be positive or negative.
- D. All of these Discuss
Correct Answer: All of these
- 6. Annuities involve:
Options- A. a series of payments
- B. all payments of equal amount
- C. payment at equal time intervals
- D. payments at the end of periods.
- E. All of these Discuss
Correct Answer: All of these
- 7. In the cash-flow diagram shown in the given figure
Options- A. Equal deposits of Rs 3000 per year (A) are made, starting now.
- B. The rate of interest is 10% per yearaccount
- C. The amount accumulated after the seventh deposit is to be computed
- D. All of these Discuss
Correct Answer: All of these
- 8. The annuity which refers to a debt payment for recovering the initial amount or capital in equal periodical payments, is known as;
Options- A. Present Worth Annuity
- B. Sinking fund annuity
- C. Compound annuity
- D. Capital recovery annuity Discuss
Correct Answer: Capital recovery annuity
- 9. Pick up the correct statement from the following:
Options- A. The change in the amount of money over a given time period is called 'time value' of money, a most important concept in engineering economy.
- B. The manifestation of the time value of money is termed as interest.
- C. Interest on borrowing = present amount owed - original loan
- D. The original investment (or loan) is referred to as principal.
- E. All of these. Discuss
Correct Answer: All of these.
- 10. The CRF (ep) is also known as: [CRF(EP) - 8% - 7], where
Options- A. 8% is the rate of interest per year
- B. money is borrowed for n = 7 years
- C. both (a) and (b)
- D. Neither (a) nor (b) Discuss
Correct Answer: both (a) and (b)
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