engineering economy MCQs – Page 6

Practise focused engineering economy questions with marked answers for exam preparation and subject revision.

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