Introduction to Engineering Economics
Quiz by Rashmi K
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- Q1
The ratio of current assets to current liabilities is known as
Debts ratio
Liquidity ratio
Acid-Test ratio
Current ratio
30s - Q2
In the cash-flow diagram shown in the given figure
Equal deposits of Rs 3000 per year (A) are made, starting now
The rate of interest is 10% per year account
All of these
The amount accumulated after the seventh deposit is to be computed
30s - Q3
If interest is paid more than once in a year, ‘i’ is the rate of interest per year, ‘n’ is the number of periods in years and ‘m’ is a number of periods per years, compound amount factor (CAF) is:
(1 + i/m)1/n
(1 + i/m)n
(1 + i/n)1/m
(1 + i/n)m
30s - Q4
If a seller recovers his capital along with accumulated compensating interest not in one single lump-sum payment but in periodical equal payments, over time:
Capital Recovery Annuity is availed
Present work Annuity is availed
Sinking Fund Annuity is availed
Sinking Fund Annuity is availed
30s - Q5
Pick up the correct statement from the following:
An annuity is a series of equal payments occurring at equal period of time
An annuity may have periods of time of any length but should always be of equal length
All the above
Annuity is called an equal payment or uniform payment series
30s - Q6
The wages of supervisors and material handlers are charged as:
Over head
Indirect labour cost
Direct labour cost
None of these
30s - Q7
Thealternatives which are standalone solutions for given situations in engineeringinvolve :
a purchase cost
the anticipated resaleable value(salvage value) and the interest return (rate of return)
All of these
the yearly costs of maintaining theassest (annual maintenance and operating cost)
the anticipated life of the assest
30s - Q8
The net present value method and the internal rate of return method will always yield the same decision when
mutually exclusive projects are evaluated.
a single project is evaluated.
All of the above are correct.
a limited number of projects must be selected from a large number of opportunities.
30s - Q9
Which of the following is an appropriate way to measure cash flows?
Consider only incremental costs and revenues
All of the above are appropriate ways to measure cash flows.
Treat depreciation as a negative cash flow
Consider only after-tax cash flows
30s - Q10
If nominal rate of return is 10% per annum and annual effective rate of interest is 10.25% per annum, determine the frequency of compounding:
3
2
None of the above
1
30s - Q11
Time value of money supports the comparison of cash flows recorded at different time period by
Discounting all cash flows to a common point of time
Compounding all cash flows to a common point of time
Using either a or b
None of the above.
30s - Q12
Mr. X takes a loan of Rs 50,000 from HDFC Bank. The rate of interest is 10% per annum. The first installment will be paid at the end of year 5. Determine the amount of equal annual installments if Mr. X wishes to repay the amount in five installments.
Rs 19310
None of the above
Rs 19500
Rs 19400
30s - Q13
What is the main advantage of using net present value (NPV) as an investment appraisal method?
It focuses on the total cash inflows and outflows of a project
t is easy to understand and calculate
It takes into account the time value of money
It provides a simple yes or no answer about the feasibility of a project
30s - Q14
How does the discount rate affect the net present value (NPV)?
The discount rate has no effect on the NPV
A lower discount rate decreases the NPV
A higher discount rate decreases the NPV
A higher discount rate increases the NPV
30s - Q15
What is the net present value (NPV) of an investment project?
The sum of all cash inflows
The present value of all expected future cash flows minus the initial investment
The difference between the total revenue and total cost of the project
The future value of all cash flows
30s
