Engineering
Economy
MCQ Test
on Engineering Economy – Set 01
Q13. The ratio of current
assets to current liabilities is known as
(A) Liquidity ratio
(B) Current ratio
(C) Acid-Test (or Quick) ratio
(D) Debts ratio
Show Answer
Answer: (B) Current ratio
Q14. Which one of the
following questions is relevant to the construction estimates?
(A) Did the estimators precisely evaluate site conditions
(B) Did the estimators use short cut methods which may be unrealistic in their
situation
(C) How much money will the contractor’s risk, loosing if he were to submit bid
on the raw estimate of cost
(D) All of these
Show Answer
Answer: (D) All of these
Q15. The construction
estimate of a project is used by:
(A) The owner of the facility
(B) The consulting architect/engineer
(C) The contractor of the project
(D) All of these
Show Answer
Answer: (D) All of these
Engineering
Economy online Practice Test – Set 02
Q1. In the cash-flow diagram
shown in the given figure
(A) Equal deposits of Rs 3000 per year (A) are made, starting
now
(B) The rate of interest is 10% per year account
(C) The amount accumulated after the seventh deposit is to be computed
(D) All of these
Show Answer
Answer: (D) All of these
Q2. Both architect and
engineer make use of the cost estimate of the project:
(A) For site selection
(B) For designing of the project
(C) For choosing alternatives
(D) All of these
Show Answer
Answer: (D) All of these
Q3. Pick up the correct
statement from the following:
(A) The ratios which show profitability in relation to sales and
those which show profitability in relation to investment are called
profitability ratios
(B) The ratio of gross profit and net sales is called profitability in relation
to sales ratio
(C) The ratio of net profit after taxes to total assets is known as
profitability in relation to investment ratio
(D) All of these
Show Answer
Answer: (D) All of these
Q4. The more critical (or
severe) test of the firm’s liquidity can be judged by:
(A) Liquidity ratio
(B) Current ratio
(C) Acid-Test (or Quick) ratio
(D) Debts ratio
Show Answer
Answer: (C) Acid-Test (or Quick) ratio
Q5. Pick up the ratio which
gives us sufficient information by which to judge the financial condition and
performance of the firm, from the following:
(A) Liquidity ratio
(B) Financial leverage ratio
(C) Activity ratio
(D) None of these
Show Answer
Answer: (D) None of these
Q6. The product of CAF (S P)
and PWF (S P) is:
(A) 1/2
(B) 1
(C) 1/3
(D) 1/4
Show Answer
Answer:(B) 1
Q7. If interest is paid more
than once in a year, ‘i’ is the rate of interest per year, ‘n’ is the number of
periods in years and ‘m’ is a number of periods per years, compound amount
factor (CAF) is:
(A) (1 + i/m)n
(B) (1 + i/n)m
(C) (1 + i/n)1/m
(D) (1 + i/m)1/n
Show Answer
Answer: (A) (1 + i/m)n
Q8. The interest calculated
on the basis of 365 days a year, is known as:
(A) Interest
(B) Ordinary simple interest
(C) Exact simple interest
(D) None of these
Answer: (C) Exact simple interest
Q9. Which one of the
following is not a construction estimate?
(A) Initial feasibility estimate
(B) Conceptual preliminary budget
(C) Definite estimate
(D) None of these
Show Answer
Answer: (D) None of these
Q10. Pick up the correct
reason for making conceptual (or preliminary) estimate from the following:
(A) To have a check on a definitive cost estimate
(B) To check quotations from contractors and/or sub-contractors
(C) To compute target estimate for the owner while drawing and specifications
are in initial stage
(D) All of these
Show Answer
Answer: (D) All of these
Q11. The project contractor
relies on the cost of the estimate:
(A) For submission of a competitive bid for a lump-sum contract
(B) For a unit price contract
(C) For preparation of a definitive estimate to help negotiate contract
(D) All of these
Show Answer
Answer: (D) All of these
Q12. If ‘P’ is principal
amount, ‘I’ is the rate of interest per annum and ‘n’ is the number of periods
in years, the compound amount factor (CAF) is:
(A) (1 + i)n
(B) (1 + i)(1/2n)
(C) √(n + i)
(D) None of these
Show Answer
Answer: (A) (1 + i)n
Q13. Pick up the correct
method adopted for developing the approximate or conceptual estimates from the
following:
(A) Base unit method
(B) Cost per function method
(C) Cost per square metre
(D) All of these
Show Answer
Answer: (D) All of these
Q14. If a seller recovers
his capital along with accumulated compensating interest not in one single
lump-sum payment but in periodical equal payments, over time:
(A) Capital Recovery Annuity fs availed
(B) Present work Annuity is availed
(C) Sinking Fund Annuity is availed
(D) Sinking Fund Annuity is availed
Show Answer
Answer: (A) Capital Recovery Annuity fs availed
Q15. If ‘P’ is principal
amount, ‘i’ is the rate of interest and ‘n’ is the number of periods in years,
then the interest factor is:
(A) (1 + ni)
(B) (ni – 1)
(C) ni
(D) None of these
Show Answer
Answer: (A) (1 + ni)
Objective
Type Questions on Engineering Economy – Set 03
Show Answer
Answer: (A) Rs. 5638
Q9. If ‘a’ is the base
amount expenditure, ‘b’ is the increase in the operation cost each year over a
period of’ ‘n’ years, the total cost of maintenance is:
(A) a + (n + 1) b
(B) a + (n – 1) b
(C) a × (n – 1) b
(D) a – (n – 1) b
Show Answer
Answer:(B) a + (n – 1) b
Q10. Pick up the correct
statement from the following:
(A) The financial ratio summarizes some aspect of the firm’s
financial condition at the time of preparing a balance sheet
(B) Both the numerator and denominator of financial ratios come directly from
the balance sheet
(C) Income statement ratios compare a flow item from the income statement to
another flow item form the income statement
(D) All of these
Show Answer
Answer: (D) All of these
Q11. If ‘S’ is the future
capital accumulated in ‘n’ years at the rate of interest ‘I’ per annum, then
present worth is:
(A) S/(1 + i)n
(B) S (1 + i)n
(C) S (1 + i)1/n
(D) None of these
Show Answer
Answer: (A) S/(1 + i)n
Q12. Liquidity ratios are
used:
(A) To measure a firm’s ability to meet short-cut obligations
(B) To compare short term obligations to short-term resources available to meet
these obligations
(C) To obtain much insight into the present cash solvency of the firm and the
firm’s ability to remain solvent in the event of adversity
(D) All of these
Show Answer
Answer: (D) All of these
Q13. The wages of
supervisors and material handlers are charged as:
(A) Over head
(B) Direct labour cost
(C) Indirect labour cost
(D) None of these
Show Answer
Answer:(A) Over head
Engineering
Economy Questions and Answers – Set 04
Q1. Which one of the following
is included in financial ratios of the firm?
(A) Profitability ratio
(B) Liquidity ratio
(C) Turnover ratio
(D) All of these
Q2. The annuity which refers to
a debt payment for recovering the initial amount or capital in equal periodical
payments, is known as;
(A) Present Worth Annuity
(B) Sinking fund annuity
(C) Compound annuity
(D) Capital recovery annuity
Q3. The financial analysis:
(A) Helps a share holder to compare the expected return on his
investment in the firm against the expected return from other alternative
investment
(B) Helps a bank to know the financial position of the firm for granting a loan
to the firm
(C) Helps to judge the success of the firm’s financial plans
(D) All of these
Q4. Each financial ratio is generally
compared by
(A) A past ratio calculated from the past financial standard of the
firm
(B) A ratio developed by using the projected financial statement of the firm
(C) A ratio of some selected firms most progressive and successful at the point
of consideration
(D) All of these
Q5. Pick up the correct
statement from the following:
(A) The ability of a company to meet obligations which are likely to
mature in short term, is called liquidity
(B) The liquidity ratio may be defined as a relationship of current liabilities
and current assets and advances
(C) The liquidity ratios are used to indicate the financial position of the
firm
(D) All of these
Q6. The owner of the
construction company makes use of the estimate:
(A) To determine the capital investment costs
(B) To assist in financial arrangements
(C) To determine economic feasibility of the project
(D) All of these
Q7. Mr. David deposits Rs 1200
now, Rs 800 two years from now and Rs 1000 five years from now. If the savings
bank’s rate of interest in 5%, he will receive an amount of Rs X, 10 years from
now, where ‘X’ is
(A) Rs. 3415
(B) Rs. 4225
(C) Rs. 4413
(D) Rs. 4826
Q8. Pick up the correct
statement from the following:
(A) Ratio analysis is the procedure of determining and interpreting
numerical relationship of various items of the financial statement
(B) All financial ratios are obtained by relating two sets of information
contained in a Single financial statement
(C) The relationship between two accounting figures expressed mathematically,
is known as a financial ratio
(D) All of these
Q9. Pick up the correct
statement from the following:
(A) The receipts and disbursements in a given time interval are
referred to as cash flow
(B) The assumptions that all cash flows occur at the end of the interest
period, is known as the end of period convention
(C) The cash flow diagram represents the statement of the problem and also
includes what is given and what is to be found
(D) All of the above
Q10. Annuities involve:
(A) A series of payments
(B) All payments of equal amount
(C) Payment at equal time intervals
(D) All of these
Q11. A project construction cost
estimate includes:
(A) The labour and material cost
(B) The equipment and over head cost
(C) The profit of the contractor
(D) All of these
Q12. Present worth Annuity (PWA)
is generally known as
(A) Premium annuities
(B) Income annuities
(C) Future annuities
(D) All of these
Q13. Pick up the correct
statement from the following:
(A)
The capital required to get a project started, is called first cost
(B) The costs associated with a new or existing project that remain unaffected
by the changes in activity level over the normal range of operation of the
project, are called fixed costs
(C) The group of costs that vary proportionately to the changes in the activity
level of a new or existing project are called variable costs
(D) All of these
Engineering
Economy Online Exam Questions – Set 05
Show Answer
Answer: (D) All of these
Q14. The key to profitable
operation for project cost control, is:
(A) To keep the project cost equal to original cost estimate
(B) To keep the project cost equal to subsequent construction budget
(C) To keep the project cost within the cost budget and knowing when and where
job costs are deviating
(D) None of these
Show Answer
Answer: (C) To keep the project cost within the cost budget and
knowing when and where job costs are deviating