engineering economy Mcqs
101. Which is NOT an essential element of an ordinary annuity ?
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A. Compound interest is paid on all amounts in the annuity.

B. The first payment is made at the beginning of the first period.

C. The amounts of all payments are equal.

D. The payments are made at equal interval of time.

102. The difference between the present and future worth of money at some time in the future is called __________________?
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A. Inflation

B. Discount

C. Depletion

D. Deduction

103. The Saudi Arabian Oil Refinery developed an oil well which is estimated to contain 5,000,000 barrels of oil at an initial cost of $ 50,000,000. What is the depletion charge during the year where it produces half million barrels of oil? Use Unit or Factor method in computing depletion?
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A. $5,025,000.00

B. $5,010,000.00

C. $5,050,000.00

D. $ 5,000,000.00
104. Oligopoly exists when there is/are _______________?
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A. Few sellers and many buyers

B. Many sellers and few buyers

C. Few sellers and few buyers

D. One seller and few buyers

105. The first cost to be incurred if the piece of equipment now in place had been bought for a second hand dealer or some other business is called ____________________?
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A. Fixed cost

B. Material cost

C. First cost

D. In-place value
106. In computing depreciation of an equipment, which of the following represents the first cost ?
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A. Initial taxes and permit fees

B. All of the above

C. The original purchase price and freight charges

D. Installation expenses

107. The declining balance method is also known as ____________________?
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A. Modified sinking fund method

B. Double percentage method

C. Modified SYD method

D. Constant percentage method
108. A bond without any security behind them except a promise to pay by the issuing corporation is called __________________?
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A. Joint bond

B. Common bond

C. Trust bond

D. Debenture bond
109. A _____________ is a market situation where economies of scale are so significant that cost are only minimized when the entire output of an industry is supplied by a single producer so that the supply costs are lower under monopoly that under perfect competition ?
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A. Ordinary monopoly

B. Perfect monopoly

C. Natural monopoly

D. Bilateral monopoly

110. A telephone switchboard 100 pair cable can be made up with either enameled wire or tinned wire. There will be 400 soldered connections. The cost of soldering a connection on the enameled wire will be P 1.65 on the tinned wire, it will be P 1.15. A 100- pair cable made up with enameled wire cost P 0.55 per linear foot and those made up of tinned wire cost P 0.75 per linear foot. Determine the length of cable run in feet so that the cost of each installation would be the same ?
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A. 1,040 feet

B. 1,120 feet

C. 1,000 feet

D. 1,100 feet

111. Salvage value is sometimes known as _____________________?
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A. Second-hand value

B. Junk value

C. Scrap value

D. Going value

112. A young engineer borrowed P 10,000 at 12% interest and paid P 2,000 per annum for the last 4 years. What does he have to pay at the end of the fifth year in order to pay off his loan ?
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A. P 6,999.39

B. P 6,292.93

C. P 6,922.93

D. P 6,222.39

113. ABC Corporation makes it a policy that for any new equipment purchased, the annual depreciation cost should not exceed 20% of the first cost at any time with no salvage value. Determine the length of service life necessary if the depreciation used is the SYD method ?
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A. 8 years

B. 7 eyars

C. 10 years

D. 9 years
114. What refers to the value of an intangible item which arises from the exclusive right of a company to provide a specified product and service in a certain region of the country ?
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A. Company value

B. Going value

C. Goodwill value

D. Franchise value
115. What is the market situation exist when there are many buyers and many sellers ?
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A. Oligopsony

B. Perfect competition

C. Monopoly

D. Oligopoly

116. A P 1,000,000 issue of 3%, 15-year bond was sold at 95%. What is the rate of interest of this investment ?
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A. 3.40%

B. 3.0%

C. 3.70%

D. 4.00%

117. Mandarin Bank advertises 9.5% account that yields 9.84% annually. Find how often the interest is compounded ?
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A. Annually

B. Monthly

C. Quarterly

D. Bimonthly

118. What refers to the ratio of the interest payment to the principal for a given unit of time and usually expressed as a percentage of the principal ?
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A. Interest rate

B. Return of investment

C. Rate of return

D. Yield

119. What type of depreciation is due to the reduction of the physical ability of an equipment or asset to produce results ?
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A. Design depreciation

B. Functional depreciation

C. Demand depreciation

D. Physical depreciation
120. What is defines as the analysis and evaluation of the monetary consequences by using the theories and principles of economics to engineering applications, designs and projects ?
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A. Economic Analysis

B. Engineering economy

C. Design cost analysis

D. Engineering cost analysis

121. What is the feature of some bonds whereby the issuer can redeem it before it matures ?
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A. Callability

B. Call class

C. Return clause

D. Recall clause

122. What is defined as the investment of loan or principal which is based not only on the original amount of the loan or principal but the amount of loaned or principal plus the previous accumulated interest ?
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A. Nominal rate of interest

B. Simple interest

C. Compound interest

D. Effective rate of interest

123. What are the two classifications of goods and services ?
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A. Consumer and producer

B. Local and imported

C. Raw and finished

D. Ready-made and made-to-order

124. What is considered as the basic consuming or demanding unit of a commodity ?
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A. Seller

B. Buyer or consumer

C. Manufacturer

D. Producer

125. The unrecovered depreciation which results due to poor estimates as to the life of the equipment is called _____________________?
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A. Annuity

B. In-place value

C. Sunk cost

D. Economic life

126. How long will it take money to double itself if invested at 5% compounded annually ?
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A. 14.7 years

B. 13.7 years

C. 14.2 years

D. 15.3 years

127. What is defined as an entity which makes product, good or services available to buyer or consumer in exchange of monetary consideration ?
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A. Producer

B. Seller

C. Manufacturer

D. Buyer or consumer
128. A VOM has a selling price of P 400. If its selling price is expected to decline at a rate of 10% per annum due to obsolescence, what will be its selling price after 5 years ?
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A. P 231.56

B. P 212.90

C. P 236.20

D. P 222.67

129. What market situation exists where there is only one buyer and only one seller ?
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A. Monopoly

B. Monopsony

C. Bilateral monopsony

D. Bilateral monopoly
130. A P 1, 000, 6% bond pays dividend semiannually and will be redeemed at 110% on June 21, 204. It is bought on June 21, 2001 to yield 4% interest. Find the price of the bond ?
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A. P 1,133.78

B. P 1,155.06

C. P 1,122.70

D. P 1,144.81
131. In what method of computing depreciation where it assumes that a sinking fund is established in which funds will accumulate for replacement purposes ?
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A. Sum-of-year digit method

B. Straight line method

C. Declining balance method

D. Sinking fund method
132. A college freshman borrowed P2,000 from a bank for his tuition fee and promised to pay the amount for one year. He received only the amount of P1,920 after the bank collected the advance interest of P80.00. What was the rate of discount ?
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A. 4.25%

B. 4.00 %

C. 4.15%

D. 3.67%

133. You borrow P3,500.00 for one year from a friend at an interest rate of 1.5% per month instead of taking a loan from a bank at a rate of 18% per year. How much lesser you will pay by borrowing the money from the bank ?
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A. P54.66

B. P 62.44

C. P44.55

D. P37.56

134. What refers to the need, want or desire for a product backed by the money to purchase it ?
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A. Supply

B. Product

C. Good

D. Demand
135. The common ratio is the ratio of_______________?
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A. Net income to owners equity

B. Gross profit to net sales

C. Current assets to current liabilities

D. Net credit sales to average net receivable

136. The deliberate lowering of the price of a nations currency in terms of the accepted standard (Gold, American dollar or the British pound) is known as ____________________?
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A. Currency devaluation

B. Currency appreciation

C. Currency depreciation

D. Currency float

137. What is the factor name of the formula (1+i)^-n ?
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A. Single payment present worth

B. Single payment compound amount

C. Uniform gradient future worth

D. Capital recovery

138. What represents the ownership of stockholders who have a residual claim on the assets of the corporation after all other claims have been settled ?
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A. Common stock

B. Incorporator stock

C. Authorized capital stock

D. Preferred stock

139. What is normally used to compare alternatives that accomplish the same purpose but have unequal lives ?
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A. Annual cost method

B. Present worth method

C. MARR

D. Capitalized cost method

140. Cash money and credit necessary to establish and operate an enterprise are generally called _____________________?
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A. Liabilities

B. Assets

C. Capital

D. Funds

141. __________________ is the element of value which a business has earned through the favorable consideration and patronage of its costumers arising from its well known and well conducted policies and operations?
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A. Big income

B. Known owners

C. Goodwill

D. Status company

142. What refers to the negotiable claim issued by a bank in lien of a term deposit ?
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A. Capital gain certificate

B. Bond

C. Certificate of deposit

D. Time deposit

143. Lands, buildings, plants and machineries are example of what type of asset ?
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A. Current asset

B. Intangible asset

C. Trade investment asset

D. Fixed asset
144. The true value of interest rate computed by equations for compound interest for a 1 year period is known as __________________?
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A. Economic return

B. Nominal interest

C. Expected return

D. Effective interest
145. An association of two or more persons for the purpose of engaging into a business for profit is called ____________________?
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A. Partnership

B. Corporation

C. Entrepreneurship

D. Proprietorship

146. What is used when a quick estimate of the doubling time for the invested money is needed ?
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A. Rule of 48

B. Rule of 72

C. Rule of 24

D. Rule of 36

147. What is the basic accounting equation ?
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A. Owners equity = assets + liability

B. Liability = assets + owners equity

C. Owners equity = liability assets

D. Assets = liability + owners equity
148. What is defined as the current assets minus inventories and prepaid expenses ?
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A. Return of investment ratio

B. Quick ratio

C. Profit margin ratio

D. Price-earnings ratio

149. Return on investment ratio is the ratio of the_____________?
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A. Market price per share to earnings per share

B. Net credit sales to average net receivable

C. Net income to owners equity

D. Cost of goods sold to average cost of inventory at hand

150. What refers to the saving which takes place because goods are not available for consumption rather than consumer really want to save ?
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A. All of the above

B. Consumer saving

C. Forced saving

D. Compulsory saving