580+ Information systems and engineering economics Solved MCQs

501.

has to be recorded by the Enrolment Agency as declared by the enrollee in the box provided by recording Male, Female or Transgender..

A. date of birth
B. gender
C. residential address
D. fingerprint
Answer» B. gender
502.

Which of the following is used to retrieve pre-enrolment data?

A. pre-enrolment id
B. one time password
C. resident's name
D. adhaar id
Answer» A. pre-enrolment id
503.

The factors of time and are the defining aspects of any engineering economic decisions

A. uncertainty
B. certainty
Answer» A. uncertainty
504.

Economic decisions differ in a fundamental way from the types of decisions typically encountered in engineering design.

A. true
B. false
Answer» A. true
505.

ENGINEERING ECONOMICS INVOLVES

A. formulating
B. estimating
C. evaluating economic outcomes
D. all
Answer» D. all
506.

The factors of time and uncertainty are the defining aspects of any engineering economic decisions

A. true
B. false
Answer» A. true
507.

engineering economic decision refers to all investment decisions relating to engineering projects.

A. true
B. false
Answer» A. true
508.

engineering economic decision is the evaluation of costs and benef associated with making a capital investment.

A. true
B. false
Answer» A. true
509.

The factors of and uncertainty are the defining aspects of any engineering economic decisions

A. time
B. investment
Answer» A. time
510.

Additional risk is not taken without an expected additional return of suitable magnitude

A. true
B. false
Answer» A. true
511.

Money has a time value because it can earn more money over time (earning power).

A. true
B. false
Answer» A. true
512.

F dollars at the end of period N is equal to a single sum P dollars now, if your earning power is measured in terms of interest rate i.

A. true
B. false
Answer» A. true
513.

Initial amount of money in transactions involving debt or investments is called the principal (P).

A. true
B. false
Answer» A. true
514.

engineering economic decision is the evaluation of costs and benef associated with making a capital .

A. expenditure
B. investment.
Answer» B. investment.
515.

Initial amount of money in transactions involving debt or investments is called  

A. interest
B. principal
Answer» B. principal
516.

Marginal revenue must exceed marginal cost, in order to carry out a profitable increase of operations

A. true
B. false
Answer» A. true
517.

A plan for receipts or disbursements (An) that yields a particular cash flow pattern over a specified length of time is called monthly equal payment

A. true
B. false
Answer» A. true
518.

At 8% interest, what is the equivalent worth of $2,042 after 5 years from now?

A. -5000
B. -4000
C. -2000
D. -3000
Answer» D. -3000
519.

If you had $2,000 now and invested it at 10%, how much would it be worth in 8 years?

A. 4200
B. 4287
C. 5000
Answer» B. 4287
520.

Money has a time value because its purchasing power changes over time (inflation).

A. true
B. false
Answer» A. true
521.

Interest is the cost of moneyas a cost to the borrower and an earning to the lender

A. true
B. false
Answer» A. true
522.

Cash Flow is the movement of money (in or out) of a project

A. true
B. false
Answer» A. true
523.

Given P = $1,000 , i = 8% and N = 3 years calculate future value using Compound interest

A. 1200
B. 1259.71
Answer» B. 1259.71
524.

Economic equivalence refers to the fact that a cash flow-whether a single payment or a series of payments-can be converted to an equivalent cash flow at any point in time.

A. true
B. false
Answer» A. true
525.

If you deposit P dollars today for N periods at i, you will have F dollars at the end of period N.

A. true
B. false
Answer» A. true
526.

A fund accumulated by periodic deposits and reserved exclusively for a specific purpose, such as retirement of a debt

A. sinking fund
B. principal
C. interest
Answer» A. sinking fund
527.

A fund created by making periodic deposits (usually equal) at compound interest in order to accumulate a given sum at a given future time for some specific purpose is sinking fund

A. true
B. false
Answer» A. true
528.

Suppose that you invest $1 for 1 year at 18% compounded monthly. How much interest would you earn?

A. 19.56 % compounded annu
B. 18.56 % compounded a
C. 20.56 % compounded annually
Answer» A. 19.56 % compounded annu
529.

Suppose that you invest $1 for 1 year at 18% compounded monthly. How much interest would you earn?

A. 19.56 % compounded annu
B. 18% compounded mon
C. 1.5% per month for 12
D. all true
Answer» D. all true
530.

Nominal Interest Rate is Interest rate quoted based on an annual period

A. true
B. false
Answer» A. true
531.

The annual equivalent worth (AE) criterion provides a basis for measuring investment worth by determining equal payments on an annual basis.

A. true
B. false
Answer» A. true
532.

When only costs are involved, the AE method is sometimes called the annual equivalent cost method.

A. true
B. false
Answer» A. true
533.

In AE analysis revenues must cover two kinds of costs:– Operating costs and Capital recovery costs

A. true
B. false
Answer» A. true
534.

Operating costs are incurred by the operation of physical plants or equipment needed to provide service

A. true
B. false
Answer» A. true
535.

Consider a machine that costs $20,000 and has a five-year useful life.At the end of the five years, it can be sold for $4,000 after all tax adjustments have been factored in. If the firm could earn an after-tax revenue of $4,400 per year with this machine, should it be purchased at an interest rate of 10%? (All benefits and costs associated with the machine are accounted for in these figures.)

A. -220.76
B. -200
C. -240
Answer» A. -220.76
536.

  is a loss in the purchasing power of money over time.

A. inflation
B. deflation
Answer» A. inflation
537.

The same dollar amount buys less of an item over time is  

A. inflation
B. deflation
Answer» A. inflation
538.

Consumer Price Index (CPI) Measures prices of typical purchases made by consumers, based on a typical market basket of goods and services required by average consumers

A. true
B. false
Answer» A. true
539.

CPI does not take into the account the price of raw material, finished product and operating cost

A. true
B. false
Answer» A. true
540.

PPI measures average change over a time in selling prices by domestic producers of goods and services.

A. true
B. false
Answer» A. true
541.

  rate is defined as the rate at which the cost general level of goods and services increases resulting in decreases of purchasing

A. deflation
B. inflation
Answer» B. inflation
542.

Actual (current) dollars (An)is the dollar value that is “influenced” by inflation.

A. true
B. false
Answer» A. true
543.

Actual (current) dollars (An)is the dollar value that is “influenced” by .

A. deflation
B. inflation
Answer» B. inflation
544.

  dollars is the dollar value that is “influenced” by inflation.

A. actual
B. constant
Answer» A. actual
545.

Constant (real) dollars reflect constant purchasing power independent of the passage of time

A. true
B. false
Answer» A. true
546.

The current gasoline price is $4.15, and it is projected to increase next year by 5%, and 8% the following year, and -3% the third year. What is the average inflation rate for the projected gasoline price for the next 3 years?

A. 3.23%
B. 3.33%
C. 5.33%
D. 3.00%
Answer» A. 3.23%
547.

If the inflation rate is 6% per year and the market interest rate is known to be 15% per year. What is the implied real interest rate in this inflationary economy?

A. 11.45%
B. 9.00%
C. 8.00%
D. 8.49%
Answer» D. 8.49%
548.

If you experience a 6 % annual inflation, how long does it take to see the purchasing power being reduced in half?

A. 13 years
B. 10 years
C. 12 years
D. 11years
Answer» C. 12 years
549.

The CPI for 2000 was 171.2 and the projected CPI for 2008 is 220. What is the general inflation rate over the last 8 years?

A. 3.65%
B. 6.1%
C. 3.18%
D. 2.83%
Answer» C. 3.18%
550.

The average starting salary for engineers for 2008 is $53,000. What is the equivalent salary in terms of purchasing power of 2000? Assume that the general inflation rate over the last 8 years is known to be 4%.

A. 34980
B. 38727
C. 72534
D. 40276
Answer» C. 72534
551.

You are considering purchasing a $1,000 bond with a coupon rate of 9.5%, interest payable annually. If the current inflation rate is 4% per year, which will continue in the foreseeable future, what would be the real rate of return if you sold the bond at $1,080 after 2 years?

A. about 9.5%
B. about 13.26%
C. about 9.26%
D. about 8.9%
Answer» D. about 8.9%
552.

You are purchasing an automobile priced at $20,000 by borrowing at 12% interest compounded monthly. The loan will be repaid in monthly installments for five years. What is the constant dollar value (value at the time of financing) of the 36th payment of this loan, if the general inflation rate is 5% compounded monthly?

A. 361.91
B. 383.66
C. 444.89
D. 396.02
Answer» B. 383.66
553.

A couple wants to save for their daughter’s college expense. The daughter will enter college 8 years from now and she will need $40,000, $41,000, $42,000 and $43,000 in actual dollars for 4 school years. Assume that these college payments will be made at the beginning of the school year. The future general inflation rate is estimated to be 6% per year and the annual inflation-free interest rate is 5%. What is the equal amount, in actual dollars, the couple must save each year until their daughter goes to college (for 8 years)?

A. 11945
B. 11838
C. 12538
D. 12142
Answer» B. 11838
554.

An investment project costs P. It is expected to have an annual net cash flow of 0.125P for 20 years. What is the project’s payback period?

A. 6 years
B. 0 year
C. 11 year
D. 8 year
Answer» D. 8 year
555.

Find the net present worth of the following cash flow series at an interest rate of 10%

A. $550 < pw(10%) ≤ $600
B. $600 < pw(10%) ≤ $650
C. $500 < pw(10%) ≤ $550
D. $650 < pw(10%) ≤ $700
Answer» B. $600 < pw(10%) ≤ $650
556.

You are considering buying an old house that you will convert into an office building for rental. Assuming that you will own the property for 10 years, how much would you be willing to pay for the old house now given the following financial data?

A. 250100
B. 232316
C. 201205
D. 218420
Answer» D. 218420
557.

Your R&D group has developed and tested a computer software package that assists engineers to control the proper chemical mix for the various process manufacturing industries.
If you decide to market the software, your first year operating net cash flow is estimated to be $1,000,000. Because of market competition, product life will be about 4 years, and the product’s market share will decrease by 25% each year over the previous year’s share.
You are approached by a big software house which wants to purchase the right to manufacture and distribute the product. Assuming that your interest rate is 15%, for what minimum price would you be willing to sell the software?

A. 2887776
B. 2766344
C. 2047734
D. 2507621
Answer» C. 2047734
558.

Find the capitalized equivalent worth for the project cash flow series at an interest rate of 10%.

A. ce(10%) ⇓ = ⇓ $1,753
B. ce(10%) ⇓ = ⇓ $1,548
C. ce(10%) ⇓ = ⇓ $1,500
D. ce(10%) ⇓ = ⇓ $1,476
Answer» B. ce(10%) ⇓ = ⇓ $1,548
559.

The following table contains a summary of how a project’s balance is expected to change over its 5 year service life at 10% interest.:Which of the following statements is incorrect?

A. the net present worth of the project at 10% interest is $1,242
B. the required additional investment at the end of period 1 is $500
C. the net future of the project at 10% interest is $2,000
D. within 2 years, the company will recover all its investments and the cost of funds (interest) from the project
Answer» B. the required additional investment at the end of period 1 is $500
560.

Reconsider the project balance table calculated at 10% given in 5.9.:Which of the following statements is correct?

A. the cash flow in period 3 is $240
B. the project is not profitable at i ⇓ = ⇓ 10%.
C. the conventional payback period is 1.7 years
D. the net present worth of the project is $2,000
Answer» A. the cash flow in period 3 is $240
561.

A newly constructed water treatment facility cost $2 million. It is estimated that the facility will need renovating every 30 years at a cost of $1 million. Annual repairs and maintenance are estimated to be $100,000 per year. At an interest rate of 6%, determine the capitalized cost of the facility.

A. 3579806
B. 3877482
C. 4301205
D. 3360343
Answer» B. 3877482
562.

Consider the following two investment alternatives:Suppose that your firm needs either machine for only 2 years. The net proceeds from the sale of machine B are estimated to be $200. What should be the required net proceeds from the sale of machine A so that both machines could be considered economically indifferent at an interest rate of 10%?

A. 850
B. 700
C. 750
D. 800
Answer» C. 750
563.

Gene Research, Inc. just finished a 4-year R&D and clinical trials successfully and expects a quick approval from the Food and Drug
Administration. If the company markets the product on their own, it requires $30 million immediately (n ⇓ = ⇓ 0) to build a new
manufacturing facility, and it is expected to have a 10 year product life. The R&D expenditure in the previous years and the anticipated revenues that the company can generate over the next 10 years is summarized as follows:Merck, a large drug company is interested in purchasing the R&D project and the right to commercialize the product from Gene Research, Inc., immediately (nD =D 0). What would be a
starting negotiating price for the project from Merck? Assume that Gene’s MARR ⇓ = 20%.

A. $524 million
B. $105 million
C. $420 million
D. $494 million
Answer» A. $524 million
564.

A manufacturing company is considering two mutually exclusive machines E1 and E2 with the following cash flow information:Which machine would you recommend if the company needs either machine for only 3 years? Assume a MARR of 12%

A. project e1
B. indifferent
C. cannot compare without knowing the year-end salvage values over their service lives
D. project e2
Answer» D. project e2
565.

You just purchased a pin inserting machine to relieve some bottleneck problems that have been created in manufacturing a PC board. The machine cost $56,000 and has an estimated service life of 5 years. At that time, the estimated salvage value would be $5,000. The machine is expected to operate 2,500 hours per year. The expected annual operating and maintenance cost would be $6,000. If your firm’s interest rate is 15%, what would be the machine cost per hour?

A. 8.79
B. 7.85
C. 11.85
D. 5.89
Answer» A. 8.79
566.

An asset with a first cost of $100,000 is depreciated over 5-year period. It is expected to have a $10,000 salvage value at the end of 5 years. Using the straight-line method, what is the book value at the end of year 2?

A. 82000
B. 90000
C. 64000
D. 60000
Answer» C. 64000
567.

The rate of tax that is leivable on STCG arising from transfer of Equity shares of a Company or units of an Equity oriented fund is

A. 10%
B. 15%
C. 20%
D. 30%
Answer» B. 15%
568.

For an industrial undertaking fulfilling the conditions, additional depreciation in respect of a machinery costing Rs.10 lakh acquired and installed on October 3, 2005 is

A. rs.75,000
B. rs.1,50,000
C. rs.1,00,000
D. none of the above
Answer» C. rs.1,00,000
569.

A.O.P should consist of :

A. individual only
B. persons other than individual only
C. both the above
D. none of the above
Answer» C. both the above
570.

Body of individual should consist of :

A. individual only
B. persons other than individual only
C. both the above
D. none of the above
Answer» A. individual only
571.

As per section 30, which expenditure incurred for a building used for the business or profession shall not be allowed as deduction?

A. a. rent, rates and taxes
B. b. insurance of building
C. c. repairs of building
D. d. capital expenditure
Answer» D. d. capital expenditure
572.

If the Computer is purchased on 11th May, 2018 then at what rate depreciation will be provided on it?

A. 60%
B. 40%
C. 30%
D. 20%
Answer» B. 40%
573.

What is the rate of depreciation charged on computer software?

A. 40%
B. 15%
C. 60%
D. 100%
Answer» B. 15%
574.

Rate of depreciation chargeable on fully temporary wooden structure for the assessment year 2019-20 is

A. 5%
B. 10%
C. 100%
D. 40%
Answer» D. 40%
575.

XYZ Ltd is engaged in production of textile articles. Opening WDV of the block of assets was Rs.` 15, 00,000. During the year, plant was acquired under this block on 15th June 2018 amounting to Rs.` 10, 00,000. One of the asset falling within the block was sold for Rs. ` 5, 50,000 on 14-01- 2019. Rate of depreciation of the block is 15%. Calculate the total amount of depreciation including additional depreciation available during the previous year for the block. C

A. rs.` 2,92,500
B. rs.`4,92,500
C. rs.` 3,92,500 88
D. rs.` 3,52,500
Answer» B. rs.`4,92,500
576.

Which of the following statements is correct?

A. the reason why the u.s. congress allows business to use macrs depreciation as opposed to conventional methods is to reduce the business tax burden over the project life.
B. under the declining balance depreciation system, it is always desirable to switch to straight line depreciation.
C. when determining the cost basis for an asset’s depreciation, you must include all the costs that were incurred to keep the asset in operable condition.
D. the main reason why a typical firm may use a straight line depreciation method in reporting an income to outside investors (as opposed to any other accelerated tax depreciation methods) is to abide by the accounting principle— that is to report the true cost of doing business
Answer» C. when determining the cost basis for an asset’s depreciation, you must include all the costs that were incurred to keep the asset in operable condition.
577.

A company purchased an industrial fork-lift for $75,000 in year 0. The company expects to use it for the next 7 years after which it plans to sell it for $10,000. The estimated gross income and expenses excluding depreciation for the first year are given below. The fork-lift will be depreciated according to a 5-year MACRS.:Determine the average tax rate applicable in the first year of operation, using the current corporate tax rate schedule.

A. 18.75%
B. 17.31%
C. 25%
D. 15%
Answer» B. 17.31%
578.

What effect would have on the break-even point and expected profit if there is an increase in fixed cost?

A. (decrease, decrease)
B. (increase, decrease)
C. (increase, increase)
D. (decrease, decrease)
Answer» B. (increase, decrease)
579.

What effect would have on the break-even point and expected profit if there is an increase in labor cost?

A. (decrease, decrease)
B. (decrease, decrease)
C. (increase, decrease)
D. (increase, increase)
Answer» C. (increase, decrease)
580.

What effect would have on the break-even point and expected profit if there is an increase in unit price?

A. (increase, decrease)
B. (decrease, decrease)
C. (increase, increase)
D. (decrease, increase)
Answer» B. (decrease, decrease)
581.

What effect would have on the break-even point and expected profit if there is an increase in financing cost?

A. (decrease, decrease)
B. (increase, decrease)
C. (increase, increase)
D. (decrease, increase)
Answer» B. (increase, decrease)
582.

What effect would have on the break-even point and expected profit if there is an increase in sales expense?

A. (increase, increase)
B. (decrease, decrease)
C. (increase, decrease)
D. (decrease, decrease)
Answer» C. (increase, decrease)
583.

Which of the following statements is most correct?

A. investment in working capital must be depreciated over the project life according to a straight-line method.
B. if a project incurs an operating loss (a negative taxable income) during a typical tax year, the firm pays no income taxes during that year.
C. whenever a project requires an investment in working capital, the profitability of the project will be affected negatively.
D. all of the above
Answer» C. whenever a project requires an investment in working capital, the profitability of the project will be affected negatively.
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