engineering economy Mcqs
51. What is the type of annuity where the payments are made at the beginning of the each period starting from the first period ?
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A. Ordinary annuity

B. Annuity due

C. Deferred annuity

D. Perpetuity

52. What is defined as any tangible economic activity that contributes directly or indirectly to the satisfaction of human want ?
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A. Goods

B. Commodities

C. Goods or commodities

D. Services
53. A factory operator bought a diesel generator set for P 10,000.00 and agreed to pay the dealer uniform sum at the end of each year for 5 years at 8% interest compounded annually, that the final payment will cancel the debt for principal and interest. What is the annual payment ?
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A. P 2,544.45

B. P 2,500.57

C. P 2,504.57

D. P 2,540.56

54. Perfect monopoly exists only if_______________?
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A. the single vendor is the only one who has the knowledge of the product

B. the single vendor can prevent the entry of all other vendors in the market

C. the single vendor is the only one who has the permit to sell

D. the single vendor gets the absolute franchise of the product

55. The functional depreciation is sometimes called ____________________?
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A. Failure depreciation

B. Life depreciation

C. Demand depreciation

D. Adolescence
56. A manufacturing firm maintains one product assembly line to produce signal generators. Weekly demand for the generators is 35 units. The line operates for 7 hours per day, 5 days per week. What is the maximum production time per unit in hours required of the line to meet the demand ?
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A. 1.6 hours per unit

B. 1.4 hours per unit

C. 1.0 hour per unit

D. 1.2 hours per unit

57. What are the common methods of computing depletion charge ?
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A. Discrete method and depletion allowance method

B. Unit method and percentage method

C. Conservative method and conventional method

D. Rational method and irrational method

58. What do you call any particular raw material or primary product such as cloth, wool, flour, coffee, etc ?
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A. Necessity

B. Stock

C. Utility

D. Commodity
59. Under conditions of perfect competition, the price at which any given product will be supplied and purchased is the price that will result in the supply and the demand being equal. This statement is known as the_________________?
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A. Law of demand

B. Law of supply and demand

C. Law of diminishing return

D. Law of supply

60. The price at which the callable bond will be redeemed from the bondholder is called ____________________?
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A. Call value

B. Redemption value

C. Face value

D. Par value

61. In what method of computing depreciation where it assumes that the annual cost of depreciation is a fixed percentage of the book value at the beginning of the year ?
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A. Straight line method

B. Sinking fund method

C. Declining balance method

D. Sum-of-year digit method

62. What is the type of annuity where the first payment does not begin until some later date in the cash flow ?
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A. Perpetuity

B. Deferred annuity

C. Annuity due

D. Ordinary annuity

63. A type of bond where the corporation pledges securities which it owns such as the stock or bonds of one of its subsidiaries ?
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A. Collateral trust bond

B. Joint bond

C. Security bond

D. Mortgage bond

64. A uniform series of payment occurring at equal interval of time is called ____________________?
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A. Amortization

B. Depreciation

C. Bond

D. Annuity
65. What is defined as a financial security note issued by business or corporation and by the government as a means of borrowing long-term fund ?
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A. Bank notes

B. T-bills

C. Securities

D. Bond
66. What is another term for unit method for computing depletion ?
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A. Percentage method

B. Sinking fund method

C. Factor method

D. Initial cost method

67. What is the effective rate corresponding to 18% compounded daily? Take 1 year is equal to 360 days______________?
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A. 19.72 %

B. 19.44%

C. 19.61%

D. 19.31%

68. What is the opposite of perfect competition ?
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A. Oligopoly

B. Monopoly

C. Oligopsony

D. Monopsony

69. What refers to the value of an asset which a disinterested third party, different from the buyer and seller, will determine in order to establish a price acceptable to both parties ?
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A. Fair value

B. Market value

C. Book value

D. Franchise value

70. What type of bond is issued jointly by two or more corporations ?
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A. Trust bond

B. Mortgage bond

C. Joint bond

D. Tie-up bond

71. What is defined as the interest on a load or principal that is based only on the original amount of the loan or principal ?
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A. Effective rate of interest

B. Simple interest

C. Compound interest

D. Nominal rate of interest

72. A leading shoe manufacturer produces a pair of Lebron James signature shoes at a labor cost of P 900.00 a pair and a material cost of P 800.00 a pair. The fixed charges on the business are P 5,000,000 a month and the variable costs are P 400.00 a pair. Royalty to Lebron James is P 1,000 per pair of shoes sold. If the shoes sell at P 5,000 a pair, how many pairs must be produced each month for the manufacturer to break-even ?
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A. 2,712

B. 2,890

C. 2,632

D. 2.59

73. What rate of interest compounded annually is the same as the rate of interest of 8% compounded quarterly ?
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A. 8.12%

B. 8.16%

C. 8.24 %

D. 8.07%

74. The amount of property in which a willing buyer to a willing seller for the property when neither one is under the compulsion to buy nor to sell is called __________________?
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A. Fair value

B. Good will value

C. Market value

D. Book value

75. What refers to the exchange mechanism that brings together the sellers and the buyers of a product, factor of production or financial security ?
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A. Market

B. Mall

C. Office

D. Store

76. The institute of Electronics and Communications Engineers of the Philippines (IECEP) is planning to put up its own building. Two proposals being considered are below.
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A. how much is proposal B more economical than proposal A if interest rate is 20% and depreciation to be neglected ?

B. The construction of a smaller building now to cost P300,000 and at the end of 5 years, an extension to be added to cost P 200,000.

C. The construction of the building now to cost P 400,000

77. What is the present worth of a P500 annuity starting at the end of the third year and continuing to the end of the fourth year, if the annual interest rate is 10 % ?
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A. P 717.17

B. P 731.17

C. P 727.17

D. P 714.71

78. In year zero, you invest P 10,000.00 in a 15% security for 5 years. During that time, the average annual inflation is 6%. How much in terms of year zero pesos will be in the account at maturity ?
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A. P 18,289.05

B. P 15,030.03

C. P 20,113.57

D. P 16,892.34

79. What is another term for perfect competition ?
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A. Free-for-all competition

B. No-limit competition

C. Atomistic competition

D. Heterogeneous market

80. Engr. Trinidad loans from a loan firm an amount of P100,000 with a rate of simple interest of 20% but the interest was deducted from the loan at the time the money was borrowed. If at the end of one year, she has to pay the full amount of P100,000, what is the actual rate of interest ?
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A. 25.0 %

B. 23.50%

C. 24.70%

D. 25.80%

81. What refers to the cost of borrowing money or the amount earned by a unit principal per unit time ?
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A. Rate of return

B. Yield rate

C. Economic return

D. Rate of interest
82. A manufacturer produces certain items at a labor cost of P 115 each, material cost of P 76 each and variable cost of P 2.32 each. If the item has a unit price of P 600, how many units must be manufactured each month for the manufacturer to break even if the monthly overhead is P428,000 _________________?
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A. 1,033

B. 1,037

C. 1,043

D. 1,053
83. What refers to the cumulative effect of elapsed time on the money value of an event, based on the earning power of equivalent invested funds capital should or will earn ?
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A. Yield

B. Present worth factor

C. Time value of money

D. Interest rate

84. Which of these gives the lowest effective rate of interest ?
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A. 12.20 % compounded annually

B. 11.60 % compounded annually

C. 11.90 % compounded annually

D. 12.35 % compounded annually

85. The monthly demand for ice cans being manufactured by Mr. Camus is 3200 pieces. With a manual operated guillotine, the unit cutting cost is P25.00. An electrically operated hydraulic guillotine was offered to Mr. Camus at a price of P275,000.00 and which cuts by 30% the unit cutting cost. Disregarding the cost of money, how many months will Mr. Camus be able to recover the cost of the machine if he decides to buy now ?
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A. 12 months

B. 10 months

C. 11 months

D. 13 months

86. Aside from many sellers and many buyers, which one is a characteristic of perfect competition ?
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A. Homogeneous product

B. All of the above

C. Perfect information and absence of all economic friction

D. Free market entry and exit

87. A man invested P110,000 for 31 days. The net interest after deducting 20% withholding tax is P890.36. Find the rate of return annually?
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A. 12.32%

B. 11.50%

C. 11.95%

D. 11.75 %
88. A firm borrows P2,000 for 6 years at 8%. At the end of 6 years, it renews the loan for the amount due plus P2,000 more for 2 years at 8%. What is the lump sum due ?
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A. P 3,250.34

B. P 3,270.34

C. P 3,260.34

D. P 3,280.34

89. By the condition of a will, the sum of P20,000 is left to a girl to be held in trust fund by her guardian until it amounts to P50,000. When will the girl receive the money if fund invested at 8% compounded quarterly ?
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A. 11.87 years

B. 11.46 years

C. 11.57 years

D. 11.23 years

90. What is the ordinary interest on P1,500.50 for 182 days at 5.2% ?
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A. P39.82

B. P39.99

C. P39.01

D. P39.45
91. Miss Calledo deposited P 1,000, P 1,500 and P 2,000 at the end of the 2nd year, 3rd year and 4th year, respectively in a savings account which earned 10% per annum. How much is in the account at the end of the 4th year ?
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A. P 4,820.00

B. P 4,860.00

C. P 4,840.00

D. P 4,880.00

92. The process of determining the value or worth of a physical property for specific reason is called ____________________?
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A. Depletion

B. Valuation

C. Investment

D. Economy

93. What is defined as the certificate of indebtedness of corporation usually for a period not less than 10 years and guaranteed by a mortgage on certain assets of a corporation ?
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A. Stock

B. Promissory note

C. Bond

D. T-bills

94. A student plans to deposit P1,500 in the bank now and another P3,000 for the next 2 years. If he plans to withdraw P5,000 three years from after his last deposit for the purpose of buying shoes, what will be the amount of money left in the bank after one year of his withdrawal? Effective annual interest rate is 10% ?
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A. P1,459.64

B. P1,945.64

C. P1,549.64

D. P1,345.98

95. What refers to the present worth of all the amount the bondholder will receive through his possession of the bond ?
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A. Redeemed value of bond

B. Value of bond

C. Par value of bond

D. Face value of bond

96. What type of bond where the corporations owner name are recorded and the interest is paid periodically to the owners with their asking for it ?
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A. Callable bond

B. Preferred bond

C. Registered bond

D. Incorporators bond

97. Under ordinary simple interest, how many days in one year ?
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A. 366

B. 365

C. 360

D. 300

98. A person buys a piece of lot for P 100,000 downpayment and 10 deferred semi-annual payments of P 8,000 each, starting three years from now. What is the present value of the investment if the rate of interest is 12% compounded semi-annually ?
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A. P 143,999.08

B. P 142,189.67

C. P 143,104.89

D. P 142,999.08

99. What refers to the goods and services that are desired by human and will be acquired only after all the needs have been satisfied ?
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A. Luxury

B. Necessity

C. Producer products

D. Consumer products

100. What is the present worth of a year annuity paying P 3,000.00 at the end of each year, with interest at 8% compounded annually ?
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A. P 7,654.04

B. P 7,420.89

C. P 7,590.12

D. P 7,731.29