chemical engineering plant economics Mcqs
1. A balance sheet for an industrial concern shows ___________________?
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A. Only fixed assets

B. Only current and fixed assets

C. Only current assets

D. The financial condition at any given time
2. Accumulated sum at the end of 5 years, if Rs. 10000 is invested now at 10% interest per annum on a compound basis is Rs ?
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A. 12500

B. 18105

C. 15000

D. 16105
3. In a chemical process plant, the total product cost comprises of manufacturing cost and the__________________?
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A. None of these

B. General expenses

C. R & D cost

D. Overhead cost

4. An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be ________________?
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A. 1000 (1 + 0.1/4)5

B. 1000 (1 + 0.1/2)5

C. 1000 (1 + 0.1)20

D. 1000 (1 + 0.1/4)20
5. Nominal and effective interest rates are equal, when the interest is compounded______________?
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A. Annually

B. In no case, they are equal

C. Semi-annually

D. Quarterly

6. An investment of Rs. 100 lakhs is to be made for construction of a plant, which will take two years to start production. The annual profit from the operation of the plant is Rs. 20 lakhs. What will be the payback time ?
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A. 7 years

B. 5 years

C. 10 years

D. 12 years

7. Six-tenth factor rule is used for estimating the_________________?
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A. Cost of piping

B. Utilities cost

C. Equipment cost by scaling

D. Equipment installation cost

8. Pick out the correct statement ?
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A. Difference between income and expense is termed as gross revenue

B. Unamortised cost is the difference between the original cost of a property and all the

C. ve any charges involved in its removal & sale

D. reciation charges made to date</strong>

E. Scrap value is the net amount of money obtainable from the sale of used property over and

F. estment

9. The ______________ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities ?
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A. Net working capital

B. Cash ratio

C. Liquids assets

D. Current ratio

10. A present sum of Rs. 100 at the end of one year, with half yearly rate of interest at 10%, will be Rs ?
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A. 91

B. 110

C. 121

D. 97

11. _________________ of depreciation calculation accounts for the interest on investment?
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A. Straight line method

B. Declining balance

C. Both A. and B.

D. Neither A. nor B.
12. Functional depreciation of an equipment is the measure of decrease in its value due to its _________________?
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A. Breakdown or accident

B. Ageing

C. Wear and tear

D. Obsolescence
13. Depreciation is ____________________ in profit with time?
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A. Decrease

B. None of these

C. No change

D. Increase

14. Which of the following is not a component of the working capital for a chemical process plant ?
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A. In-process inventory

B. Minimum cash reserve

C. Product inventory

D. Storage facilities
15. The economic life of a large chemical process plant as compared to a small chemical plant is_______________?
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A. Almost equal

B. Slightly less

C. Much more

D. Only slightly more

16. Utilities in a chemical process plant includes compressed air, steam, water, electrical power, oxygen, acetylene, fuel gases etc. Utility costs for ordinary chemical process plants ranges roughly from _______________ percent of the total product cost?
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A. 1 to 5

B. 25 to 35

C. 10 to 20

D. 35 to 45

17. ________________ of depreciation calculation does not take into account the interest on investments?
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A. Sum of the years-digits method

B. Sinking fund method

C. Present worth method

D. All A, B. and C.

18. Fixed capital investment of a chemical plant is the total amount of money needed to supply the necessary plant and manufacturing facilities plus the working capital for operation of the facilities. Which of the following components of fixed capital investment requires minimum percentage of it ?
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A. Cost for piping

B. Equipment installation cost

C. Equipment insulation cost

D. Electrical installation cost

19. Which of the following is not a component of the fixed capital for a chemical plant facility ?
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A. Utilities plants

B. Raw materials inventory

C. Process equipment

D. Emergency facilities

20. Payback period____________________?
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A. Is the length of time over which the earnings on a project equals the investment

B. Is affected by the variation in earnings after the recovery of the investment

C. And economic life of a project are the same

D. All A, B. and C

21. Pick out the wrong statement ?
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A. e. net worth + total debt)

B. Debt-equity ratio of a chemical company describes the lenders contribution for each rupee of

C. Working capital = current assets + current liability

D. Return on investment (ROI) is the ratio of profit before interest & tax and capital employed

E. ers contribution i.e., debt-equity ratio = total debt/net worth

F. Turn over = opening stock + production closing stock

22. A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as __________________?
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A. Annuity

B. Perpetuity

C. Capital charge factor

D. Future worth

23. The total capital investment for a chemical process plant comprises of the fixed capital investment and the_________________?
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A. Overhead cost

B. Working capital

C. Indirect production cost

D. Direct production cost

24. Which of the following is not a component of working capital ?
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A. Raw materials is stock

B. Transportation facilities

C. Finished products in stock

D. Semi-finished products in the process

25. An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the__________________?
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A. Manufacturing cost

B. Depreciation by sinking fund method

C. Cash ratio

D. Discrete compound interest

26. Cost of instrumentation in a modern chemical plant ranges from _____________________ percent of the total plant cost?
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A. 20 to 30

B. 60 to 70

C. 5 to 10

D. 40 to 50

27. The payback method for the measurement of return on investment___________________?
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A. Does not measure the discounted rate of return

B. Gives a correct picture of profitability

C. Underemphasises liquidity

D. Takes into account the cash inflows after the recovery of investments

28. Personnel working in the market research group is responsible for the job of__________________?
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A. Equipment selection

B. Product evaluation

C. Cost estimation

D. Equipment design

29. Pick out the wrong statement ?
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A. The ratio of immediately available cash to the total current liabilities is known as the cash

B. io

C. Gross revenue is that total amount of capital received as a result of the sale of goods or service

D. Net revenue is the total profit remaining after deducting all costs excluding taxes

E. ws the relationship among total income, costs & profit over the time interval

F. Consolidated income statement based on a given time period indicates surplus capital and

30. Effluent treatment cost in a chemical plant is categorised as the __________________ cost?
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A. Fixed

B. Capital

C. Utilities

D. Overhead

31. Depreciation________________?
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A. All A, B. and C.

B. Does figure in the calculation of income tax liability on cash flows from an investment

C. Costs (on annual basis) are constant when the straight line method is used for its

D. Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time

E. ermination

32. If an amount R is paid at the end of every year for n years, then the net present value of the annuity at an interest rate of i is _________________?
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A. R [{(1 + i)n 1}/ i ]

B. R [{(1 + i)n 1}/ i (1 + i)n]

C. R/(1 + i)n

D. R(1 + i)n

33. _____________ method for profitability evaluation of a project does not account for investment cost due to land ?
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A. Rate of return on investment

B. Pay out period

C. Net present worth

D. Discounted cash flow

34. For a given fluid, as the pipe diameter increases, the pumping cost ______________________?
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A. Decreases

B. Remains the same

C. May increase or decrease, depending upon whether the fluid is Newtonian or non-Newtonian

D. Increases

35. Construction expenses are roughly _____________ percent of the total direct cost of the plant ?
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A. 2

B. 10

C. 30

D. 50

36. If S is the amount available after n interest periods for an initial principal P with the discrete compound interest rate i, the present worth is given by__________________?
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A. S/(1 + i)n

B. S/(1 + n)i

C. (1 + i)n/S

D. S/(1 + in)

37. Generally, income taxes are based on the____________________?
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A. Total income

B. Total product cost

C. Gross earning

D. Fixed cost

38. Effective and nominal interest rates are equal, when the interest is compounded__________________?
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A. Half-yearly

B. Monthly

C. Fortnightly

D. Annually
39. Cost of piping in a fluid processing unit (e.g., distillation) of a chemical process plant is about _____________ percent of the fixed capital investment ?
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A. 13

B. 34

C. 4

D. 22

40. Break-even point is the point of intersection of_____________________?
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A. Fixed cost and sales revenue

B. None of these

C. Fixed cost and total cost

D. Total cost and sales revenue
41. The ratio of gross annual sales to the fixed capital investment is termed as the ________________ ratio?
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A. Turnover

B. Investment

C. Capital

D. Cash reserve

42. Manufacturing cost in a chemical company does not include the____________________?
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A. Plant overheads

B. Administrative expenses

C. Fixed charges

D. Direct products cost

43. The inventory of raw materials included in the working capital is usually about ______________ month?s supply of raw materials valued at delivery prices?
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A. One

B. Twelve

C. Three

D. Six

44. Which of the following is not a current asset of a chemical company ?
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A. None of these

B. Marketable securities

C. Inventories

D. Chemical equipments
45. The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of _____________ percent ?
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A. 1 to 2

B. 0.1 to 1

C. 50 to 60

D. 10 to 20
46. Pick out the wrong statement ?
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A. estment

B. Annual depreciation rate of buildings in a chemical plant is about 3% of its initial cost

C. Insurance rates on annual basis in a chemical plant may be about 1% of the fixed capital

D. ut 10% of the fixed capital investment

E. lisation (NSR)</strong>

F. The annual depreciation rate for machinery and equipments in a chemical process plant is

47. Utilities cost in the operation of chemical process plant comes under the ?
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A. Plant overhead cost

B. Direct production cost

C. General expenses

D. Fixed charges

48. Optimum number of effects in a multiple effect evaporator is decided by the____________________?
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A. Floor area availability

B. Terminal parameters

C. Cost benefit analysis

D. Evaporation capacity required

49. The amount of simple interest during n interest period is (where, i = interest rate based on the length of one interest period, p = principal) ?
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A. p.i.n.

B. p(1 + i.n)

C. p(1 i.n)

D. p(1 + i)n

50. The depreciation during the year n, in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage N to the ?
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A. Depreciation during the (n 1)th year

B. Book value at the end of (n 1)th year

C. Difference between initial cost and salvage value

D. Initial cost