MCQ Test on Engineering Economy - Set 01

Practice Test: Question Set - 01


1. In a cash flow series:
    (A) Uniform gradient signifies that an income or disbursement changes by the same amount in each interest period
    (B) Either an increase or decrease in the amount of a cash flow is called the gradient
    (C) The gradient in the cash flow may be positive or negative
    (D) All of these

2. In a cash-flow diagram:
    (A) Time 0 is considered to be the present
    (B) Time 1 is considered to be the end of time period 1
    (C) A vertical arrow pointing up indicates a positive cash flow
    (D) All of these

3. Which method is adopted to develop an approximate or conceptual estimate for perimeter works for buildings from the following?
    (A) Base unit method
    (B) Cost per function method
    (C) Cost per square metre method
    (D) Cost per linear metre method

4. Pick up the correct statement from the following:
    (A) The ratio of current assets, loans and advances, and the current liquidity is called current ratio
    (B) Larger the current ratio, larger is the margin of safety
    (C) The operating profit is the difference between gross profit and operating expenses
    (D) All of these

5. The ratio of current assets to current liabilities is known as
    (A) Liquidity ratio
    (B) Current ratio
    (C) Acid-Test (or Quick) ratio
    (D) Debts ratio

6. In the cash-flow diagram shown in the given figure
Engineering Economy image 01


    (A) Equal deposits of Rs 3000 per year (A) are made, starting now
    (B) The rate of interest is 10% per year account
    (C) The amount accumulated after the seventh deposit is to be computed
    (D) All of these

7. The more critical (or severe) test of the firm's liquidity can be judged by:
    (A) Liquidity ratio
    (B) Current ratio
    (C) Acid-Test (or Quick) ratio
    (D) Debts ratio

8. 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:
    (A) (1 + i/m)n
    (B) (1 + i/n)m
    (C) (1 + i/n)1/m
    (D) (1 + i/m)1/n

9. Pick up the correct reason for making conceptual (or preliminary) estimate from the following:
    (A) To have a check on a definitive cost estimate
    (B) To check quotations from contractors and/or sub-contractors
    (C) To compute target estimate for the owner while drawing and  specifications are in initial stage
    (D) All of these

10. Pick up the correct method adopted for developing the approximate or conceptual estimates from the following:
    (A) Base unit method
    (B) Cost per function method
    (C) Cost per square metre
    (D) All of these

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