Engineering Economy Objective Questions with Answers

Practice Test: Question Set - 07


1. Keeping in view, the feasibility order of magnitude, the preliminary, conceptual or budget estimates, are prepared by:
    (A) Architect/engineer
    (B) Construction manager
    (C) Owner himself/herself
    (D) Construction manager

2. The person desires to pay off the amount in 10 equal annual instalments. The amount of each installment is:
    (A) Rs. 5638
    (B) Rs. 6638
    (C) Rs. 7738
    (D) None of these

3. Liquidity ratios are used:
    (A) To measure a firm’s ability to meet short-cut obligations
    (B) To compare short term obligations to short-term resources available to meet these obligations
    (C) To obtain much insight into the present cash solvency of the firm and the firm's ability to remain solvent in the event of adversity
    (D) All of these

4. Each financial ratio is generally compared by
    (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

5. Pick up the correct statement from the following:
    (A) Ratio analysis is the procedure of determining and interpreting numerical relationship of various items of the financial statement
    (B) All financial ratios are obtained by relating two sets of information contained in a Single financial statement
    (C) The relationship between two accounting figures expressed mathematically, is known as a financial ratio
    (D) All of these

6. Present worth Annuity (PWA) is generally known as
    (A) Premium annuities
    (B) Income annuities
    (C) Future annuities
    (D) All of these

7. Pick up the method used for project evaluation and selection in capital budgeting from the following:
    (A) Payback period
    (B) Internal ratio of return
    (C) Net present worth
    (D) All the above

8. Pick up the correct statement from the following:
    (A) The capital required to get a project started is the first cost
    (B) The first cost is a single cash flow or a series of cash flows that are made in the beginning of the activity's life span
    (C) The first cost of purchasing a car is the sum of the down payment, taxes and dealers charges
    (D) All of these

9. Pick up the correct statement from the following:
    (A) The difference between sales revenue and cost of goods sold, is known as 'Gross Profit'
    (B) The gross profit percentage is the average profit margin obtained on goods sold
    (C) The relationship of contribution to sales is known as contribution ratio
    (D) All of these

10. The key to profitable operation for project cost control, is:
    (A) To keep the project cost equal to original cost estimate
    (B) To keep the project cost equal to subsequent construction budget
    (C) To keep the project cost within the cost budget and knowing when and where job costs are deviating
    (D) None of these

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