Engineering Economics MCQs

Question 1

Cash money and credit necessary to establish and operate an enterprise are generally called ______.

Accepted Answer

Capital

Answer

Funds

Answer

Assets

Answer

Liabilities

Question 2

What is an index of short-term paying ability?

Accepted Answer

Current ratio

Answer

Price-earnings ratio

Answer

Profit margin ratio

Answer

Gross margin

Question 3

Which one of the following statements is correct?

Accepted Answer

All of these

Answer

The number of years required to recover the initial cash investment in a project, is called Pay Back period (PBP)

Answer

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

Answer

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)

Question 4

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:

Accepted Answer

Capital Recovery Annuity fs availed

Answer

Present work Annuity is availed

Answer

Sinking Fund Annuity is availed

Answer

None of the above

Question 5

What is defined as the investment of loan or principal which is based not only on the original amount of the loan or principal but the amount of loaned or principal plus the previous accumulated interest?

Accepted Answer

Compound interest

Answer

Effective rate of interest

Answer

Nominal rate of interest

Answer

Simple interest

Question 6

What refers to the value of an intangible item which arises from the exclusive right of a company to provide a specified product and service in a certain region of the country?

Accepted Answer

Franchise value

Answer

Company value

Answer

Going value

Answer

Goodwill value

Question 7

What stock represents ownership and enjoys certain preferences than ordinary stock?

Accepted Answer

Preferred stock

Answer

Authorized stock

Answer

Incorporator’s stock

Answer

Presidential stock

Question 8

What is the factor name of the formula $$\left[ {\frac{{{	ext{i}}{{\left( {1 + {	ext{i}}} ight)}^{	ext{n}}}}}{{{{\left( {1 + {	ext{i}}} ight)}^{	ext{n}}} - 1}}} ight]?$$

Accepted Answer

Capital recovery

Answer

Uniform series sinking fund

Answer

Single payment present worth

Answer

Uniform gradient future worth

Question 9

The financial analysis:

Accepted Answer

All of these

Answer

Helps a share holder to compare the expected return on his investment in the firm against the expected return from other alternative investment

Answer

Helps a bank to know the financial position of the firm for granting a loan to the firm

Answer

Helps to judge the success of the firm's financial plans