Objective Type Questions on Engineering Economy - Set 03

Practice Test: Question Set - 03


1. Pick up the correct statement from the following:
    (A) An annuity is a series of equal payments occurring at equal period of time
    (B) Annuity is called an equal payment or uniform payment series
    (C) An annuity may have periods of time of any length but should always be of equal length
    (D) All the above

2. The sunk costs include:
    (A) A past expenditure
    (B) An unrecovered balance
    (C) An invested capital that cannot be retrieved
    (D) All of these

3. Pick up the element of the cost from the following:
    (A) Direct material
    (B) Direct labour
    (C) Over head
    (D) All of these

4. The ratio obtained by dividing 'quick assets' by current liabilities is called
    (A) Turnover ratio
    (B) Acid test ratio
    (C) Solvency ratio
    (D) None of these

5. The construction estimate of a project is used by:
    (A) The owner of the facility
    (B) The consulting architect/engineer
    (C) The contractor of the project
    (D) All of these

6. Pick up the correct statement from the following:
    (A) The ratios which show profitability in relation to sales and those which show profitability in relation to investment are called profitability ratios
    (B) The ratio of gross profit and net sales is called profitability in relation to sales ratio
    (C) The ratio of net profit after taxes to total assets is known as profitability in relation to investment ratio
    (D) All of these

7. The product of CAF (S P) and PWF (S P) is:
    (A) 1/2
    (B) 1
    (C) 1/3
    (D) 1/4

8. Which one of the following is not a construction estimate?
    (A) Initial feasibility estimate
    (B) Conceptual preliminary budget
    (C) Definite estimate
    (D) None of these

9. If ‘P’ is principal amount, ‘I’ is the rate of interest per annum and ‘n’ is the number of periods in years, the compound amount factor (CAF) is:
    (A) (1 + i)n
    (B) (1 + i)(1/2n)
    (C) √(n + i)
    (D) None of these

10. If ‘P’ is principal amount, ‘i’ is the rate of interest and ‘n’ is the number of periods in years, then the interest factor is:
    (A) (1 + ni)
    (B) (ni - 1)
    (C) ni
    (D) None of these

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