Engineering Economy Multiple Choice Quiz Test - Set 06 - ObjectiveBooks

# Practice Test: Question Set - 06

1. Which one of the following definitions is correct?
(A) The ratio of total debt to share holder's equity is called 'debt ratio'
(B) The ratio debt-to-total assets is called Debt-to-total assets ratio
(C) The ratio of earnings before interest and taxes for a particular reporting period to the amount of interest charges for the period is called interest coverage ratio
(D) All of these

2. Pick up the correct statement from the following:
(A) Over head rate = total over head in rupees for period/Direct labour in rupees for period
(B) Over head cost per unit = Overhead ratio × direct labour cost/unit
(C) Both (a) and (b)
(D) Neither (a) nor (b)

3. If ‘S’ is the future capital accumulated in ‘n’ years at the rate of interest ‘I’ per annum, then present worth is:
(A) S/(1 + i)n
(B) (1 + i)n
(C) (1 + i)1/n
(D) None of these

4. The financial analysis:
(A) Helps a share holder to compare the expected return on his investment in the firm against the expected return from other alternative investment
(B) Helps a bank to know the financial position of the firm for granting a loan to the firm
(C) Helps to judge the success of the firm's financial plans
(D) All of these

5. Mr. David deposits Rs 1200 now, Rs 800 two years from now and Rs 1000 five years from now. If the savings bank's rate of interest in 5%, he will receive an amount of Rs X, 10 years from now, where ‘X’ is
(A) Rs. 3415
(B) Rs. 4225
(C) Rs. 4413
(D) Rs. 4826

6. A project construction cost estimate includes:
(A) The labour and material cost
(B) The equipment and over head cost
(C) The profit of the contractor
(D) All of these

7. Earnings per share is the most important ratio for
(A) Share holders
(B) Banks
(C) Company's management
(D) All of these

8. Current ratio is:
(A) Current assets/Current liabilities
(B) (Current assets + loans)/Current liabilities
(C) (Current assets + loans advances)/Current liabilities
(D) None of these

9. The alternatives which are standalone solutions for given situations in engineering involve:
(A) A purchase cost (first cost)
(B) The anticipated life of the assets
(C) The anticipated resalable value (salvage value) and the interest return (rate of return)
(D) All of these

10. The CRF (ep) is also known as: [CRF(EP) - 8% - 7], where
(A) 8% is the rate of interest per year
(B) Money is borrowed for n = 7 years
(C) Both (a) and (b)
(D) Neither (a) nor (b)

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