chemical engineering plant economics MCQs – Page 2

Practise multiple-choice questions from chemical engineering plant economics for competitive examinations and subject revision. Review each marked answer and report any item that may be outdated or unclear.

chemical engineering plant economics Mcqs
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