# Practice Test: Question Set - 04

**1. Pick up the main purpose of project cost control from the following:**

- (A) To signal
immediate warning of uneconomic operations

- (B) To provide a
feed back to the estimator

- (C) To
promote cost consciousness

- (D) All of these

**2. Pick up the correct statement from the following:**

- (A) A NPV
profile graph shows the curvilinear relationship between the net present value
of the project and discount rate employed

- (B) In
a NPV profile, if discount rate is zero, then net present value is simply total
cash inflows less the total cash outflows of the project

- (C) As
the discount rate increases, the net present value profile slopes downward to
the right

- (D) All of these

**3. If ‘**

*a’*is the base amount expenditure, ‘*b’*is the increase in the operation cost each year over a period of’*'n’*years, the total cost of maintenance is:- (A)

*a*+ (

*n*+ 1)

*b*

- (B)

*a*+ (

*n*- 1)

*b*

- (C)

*a*× (

*n*- 1)

*b*

- (D)

*a*- (

*n*- 1)

*b*

**4. Which one of the following is included in financial ratios of the firm?**

- (A) Profitability
ratio

- (B) Liquidity
ratio

- (C) Turnover
ratio

- (D) All of these

**5. Pick up the correct statement from the following:**

- (A) The
ability of a company to meet obligations which are likely to mature in short
term, is called liquidity

- (B) The
liquidity ratio may be defined as a relationship of current liabilities and
current assets and advances

- (C) The
liquidity ratios are used to indicate the financial position of the firm

- (D) All of these

**6. Pick up the correct statement from the following:**

- (A) The
receipts and disbursements in a given time interval are referred to as cash
flow

- (B) The
assumptions that all cash flows occur at the end of the interest period, is
known as the end of period convention

- (C) The cash
flow diagram represents the statement of the problem and also includes what is
given and what is to be found

- (D) All of the
above

**7. Pick up the correct statement from the following:**

- (A) Engineering
economy is a collection of mathematical techniques which simplify economic
comparisons

- (B) Engineering
economy is a decision assistance tool by which one method will be chosen as the
most economically one

- (C) For
understanding the engineering economy, one should be able to classify the basic
terminology and fundamental concepts of economy

- (D) All of these

**8. In the cash flow diagram shown in the given figure**

- (A) The first
disbursement occurs at the end of year 2

- (B) The second
disbursement occurs at the end of year 4

- (C) The first
receipt occurs at the end of year 1

- (D) All of these

**9. Which one of the following statements is correct?**

- (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

**10. The wages of supervisors and material handlers are charged as:**

- (A) Over head

- (B) Direct
labour cost

- (C) Indirect
labour cost

- (D) None of
these

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