Engineering Economics MCQs

Question 1

The annuity which refers to a debt payment for recovering the initial amount or capital in equal periodic payments, is known as ;

Accepted Answer

Capacity recovery annuity

Answer

Present Worth Annuity

Answer

Sinking fund annuity

Answer

Compound annuity

Question 2

If a seller recovers his capital along with accumulated compensating interest not in one single lumpsum payment but in periodical equal payments, over time :

Accepted Answer

Capital Recovery Annuity is availed

Answer

Present work Annuity is availed

Answer

Sinking Fund Annuity is availed

Answer

Sinking Fund Annuity is availed

Question 3

The alternatives which are standalone solutions for given situations in engineering involve :

Accepted Answer

All of these

Answer

a purchase cost (first cost)

Answer

the anticipated life of the assets

Answer

the yearly costs of maintaining the assets (annual maintenance and operating cost)

Question 4

Pick up the correct statement from the following :

Accepted Answer

All of these

Answer

The change in the amount of money over a given time period is called 'time value' money, a most important concept in engineering economy.

Answer

The manifestation of the time value of money is termed as interest.

Answer

Interest on borrowing = present amount owed original loan

Question 5

Pick up the correct statement from the following :

Accepted Answer

All of these

Answer

The receipts and disbursements in a given time interval are referred to as cash flow.

Answer

The assumptions that all cash flows occur at the end of the interest period, is known as the end of period convention.

Answer

A cash flow diagram is a graphical representation of cash flows drawn on a time scale.

Question 6

With reference to the repayment schedule of Rs 5000 for 5 years shown in Table 1, pick up the correct statement from the following:

Accepted Answer

All of these.

Answer

No interest is recovered until fifth year

Answer

No principal is recovered until the fifth year

Answer

Interest accumulates each year on the total of principal and all accumulated interest.

Question 7

A person took a loan for Rs 100,000 for 10 years at 11% compound interest. The person desires to pay off the amount in 10 equal annual instalments. The amount of each instalment is:

Accepted Answer

Rs 5638

Answer

Rs 6638

Answer

Rs 7738

Answer

None of these

Question 8

The wages of supervisors and material handlers are charges ad

Accepted Answer

Over head

Answer

direct labour cost

Answer

indirect labour cost

Answer

None of these

Question 9

Pick up the correct statement from the following: total-head in rupees for period

Accepted Answer

both (a) and (b)

Answer

Over head rate direct labour in rupees for period

Answer

Over head cost per unit -= Overhead ratio x direct labour cost/unit

Answer

neither (a) nor (b)