570+ Information systems and engineering economics Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Computer Science Engineering (CSE) .

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101.	Economic decisions differ in a fundamental way from the types of decisions typically encountered in engineering design.
A.	true
B.	false
Answer» A. true

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102.	ENGINEERING ECONOMICS INVOLVES
A.	formulating
B.	estimating
C.	evaluating economic outcomes
D.	all
Answer» D. all

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103.	The factors of time and uncertainty are the deﬁning aspects of any engineering economic decisions
A.	true
B.	false
Answer» A. true

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104.	An instant dollar is worth more than a distant dollar
A.	true
B.	false
Answer» A. true

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105.	engineering economic decision refers to all investment decisions relating to engineering projects.
A.	true
B.	false
Answer» A. true

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106.	engineering economic decision is the evaluation of costs and benef associated with making a capital investment.
A.	true
B.	false
Answer» A. true

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107.	Engineering economics is needed for many kinds of decision making
A.	true
B.	false
Answer» A. true

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108.	The factors of and uncertainty are the deﬁning aspects of any engineering economic decisions
A.	time
B.	investment
Answer» A. time

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109.	Additional risk is not taken without an expected additional return of suitable magnitude
A.	true
B.	false
Answer» A. true

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110.	Money has a time value because it can earn more money over time (earning power).
A.	true
B.	false
Answer» A. true

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111.	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

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112.	Initial amount of money in transactions involving debt or investments is called the principal (P).
A.	true
B.	false
Answer» A. true

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113.	engineering economic decision is the evaluation of costs and benef associated with making a capital .
A.	expenditure
B.	investment.
Answer» B. investment.

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114.	Initial amount of money in transactions involving debt or investments is called
A.	interest
B.	principal
Answer» B. principal

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115.	How many years would it take an investment to double at 10% annual interest?
A.	7.27 years
B.	8 years
C.	9 years
Answer» A. 7.27 years

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116.	Marginal revenue must exceed marginal cost, in order to carry out a proﬁtable increase of operations
A.	true
B.	false
Answer» A. true

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117.	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

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118.	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

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119.	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

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120.	Money has a time value because its purchasing power changes over time (inﬂation).
A.	true
B.	false
Answer» A. true

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121.	Interest is the cost of moneyas a cost to the borrower and an earning to the lender
A.	true
B.	false
Answer» A. true

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122.	Cash Flow is the movement of money (in or out) of a project
A.	true
B.	false
Answer» A. true

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123.	the practice of charging an interest rate to an initial sum and to any previously accumulated interest that has not been withdrawn.
A.	compound interest
B.	simple interest
Answer» A. compound interest

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124.	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

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125.	Calculate future value on the principal amount of Rs. 2000 at the interest rate of 6% for the period of 5 years using simple interest
A.	1200
B.	1259.71
C.	2600
D.	none
Answer» C. 2600

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126.	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

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127.	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

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128.	You want to set aside a lump sum amount today in a savings account that earns 7% annual interest to meet a future expense in the amount of $10,000 to be incurred in 6 years. How much do you need to deposit today?
A.	5000
B.	6663
C.	8000
Answer» B. 6663

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129.	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

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130.	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

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131.	the practice of charging an interest rate only to an initial sum (principal amount) is
A.	compound interest
B.	simple interest
Answer» B. simple interest

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132.	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

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133.	Effective Interest Rate is Actual interest earned or paid in a year or some other time period
A.	true
B.	false
Answer» A. true

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134.	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

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135.	Nominal Interest Rate is Interest rate quoted based on an annual period
A.	true
B.	false
Answer» A. true

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136.	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

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137.	When only costs are involved, the AE method is sometimes called the annual equivalent cost method.
A.	true
B.	false
Answer» A. true

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138.	In AE analysis revenues must cover two kinds of costs:– Operating costs and Capital recovery costs
A.	true
B.	false
Answer» A. true

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139.	Operating costs are incurred by the operation of physical plants or equipment needed to provide service
A.	true
B.	false
Answer» A. true

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140.	Capital recovery costs are incurred by purchasing assets to be used in production and service.
A.	true
B.	false
Answer» A. true

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141.	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

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142.	Inﬂation is a loss in the purchasing power of money over time.
A.	true
B.	false
Answer» A. true

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143.	is a loss in the purchasing power of money over time.
A.	inﬂation
B.	deﬂation
Answer» A. inﬂation

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144.	The same dollar amount buys less of an item over time is
A.	inﬂation
B.	deﬂation
Answer» A. inﬂation

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145.	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

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146.	CPI does not take into the account the price of raw material, ﬁnished product and operating cost
A.	true
B.	false
Answer» A. true

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147.	PPI measures average change over a time in selling prices by domestic producers of goods and services.
A.	true
B.	false
Answer» A. true

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148.	Inﬂation rate is deﬁned as the rate at which the cost general level of goods and services increases resulting in decreases of purchasing
A.	true
B.	false
Answer» A. true

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149.	Actual (current) dollars (An)is the dollar value that is “inﬂuenced” by inﬂation.
A.	true
B.	false
Answer» A. true

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150.	Actual (current) dollars (An)is the dollar value that is “inﬂuenced” by .
A.	deﬂation
B.	inﬂation
Answer» B. inﬂation

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570+ Information systems and engineering economics Solved MCQs

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

ENGINEERING ECONOMICS INVOLVES

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

An instant dollar is worth more than a distant dollar

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

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

Engineering economics is needed for many kinds of decision making

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

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

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

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.

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

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

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

How many years would it take an investment to double at 10% annual interest?

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

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

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

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

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

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

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

the practice of charging an interest rate to an initial sum and to any previously accumulated interest that has not been withdrawn.

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

Calculate future value on the principal amount of Rs. 2000 at the interest rate of 6% for the period of 5 years using simple interest

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.

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

You want to set aside a lump sum amount today in a savings account that earns 7% annual interest to meet a future expense in the amount of $10,000 to be incurred in 6 years. How much do you need to deposit today?

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

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

the practice of charging an interest rate only to an initial sum (principal amount) is

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

Effective Interest Rate is Actual interest earned or paid in a year or some other time period

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

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

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

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

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

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

Capital recovery costs are incurred by purchasing assets to be used in production and service.

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

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

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

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

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

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

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

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

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