McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Computer Science Engineering (CSE) .
| 151. |
dollars is the dollar value that is “influenced” by inflation. |
| A. | actual |
| B. | constant |
| Answer» A. actual | |
| 152. |
Constant (real) dollars reflect constant purchasing power independent of the passage of time |
| A. | true |
| B. | false |
| Answer» A. true | |
| 153. |
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. | 0.0323 |
| B. | 0.0333 |
| C. | 0.0533 |
| D. | 0.03 |
| Answer» A. 0.0323 | |
| 154. |
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. | 0.1145 |
| B. | 0.09 |
| C. | 0.08 |
| D. | 0.0849 |
| Answer» D. 0.0849 | |
| 155. |
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 | |
| 156. |
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. | 0.0365 |
| B. | 0.061 |
| C. | 0.0318 |
| D. | 0.0283 |
| Answer» C. 0.0318 | |
| 157. |
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 | |
| 158. |
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% | |
| 159. |
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 | |
| 160. |
A couple wants to save for their daughter’s college expense. The daughter will enter college 8 years from now and she will need
|
| A. | 11945 |
| B. | 11838 |
| C. | 12538 |
| D. | 12142 |
| Answer» B. 11838 | |
| 161. |
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 | |
| 162. |
Which of the following statements is incorrect? |
| A. | the simplicity of the payback period method is one of its most appealing qualities even though it fails to measure project profitability. |
| B. | if two investors are considering the same project, the payback period will be longer for the investor with the higher marr. |
| C. | considering the cost of funds in a payback calculation is equivalent to finding the time period when the project balance becomes zero. |
| D. | if you were to consider the cost of funds in a payback period calculation, you would have to wait longer to breakeven as you increase the interest rate. |
| Answer» B. if two investors are considering the same project, the payback period will be longer for the investor with the higher marr. | |
| 163. |
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 | |
| 164. |
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 | |
| 165. |
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
|
| A. | 2887776 |
| B. | 2766344 |
| C. | 2047734 |
| D. | 2507621 |
| Answer» C. 2047734 | |
| 166. |
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 | |
| 167. |
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 | |
| 168. |
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 | |
| 169. |
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
|
| A. | 3579806 |
| B. | 3877482 |
| C. | 4301205 |
| D. | 3360343 |
| Answer» B. 3877482 | |
| 170. |
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 | |
| 171. |
Gene Research, Inc. just finished a 4-year R&D and clinical trials successfully and expects a quick approval from the Food and Drug
|
| A. | $524 million |
| B. | $105 million |
| C. | $420 million |
| D. | $494 million |
| Answer» A. $524 million | |
| 172. |
A manufacturing company is considering the purchase of a new CNC lathe, which will cost $60,000 and has an annual maintenance cost of
|
| A. | 135928 |
| B. | 132275 |
| C. | 114487 |
| D. | 72275 |
| Answer» B. 132275 | |
| 173. |
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 | |
| 174. |
Consider a project with a first cost (investment) of $250,000, an annual O&M cost of $50,000, annual revenue of $160,000, and a salvage value of $40,000 after a 10-year life. Find the annual worth of the project assuming an interest of 13% per year. |
| A. | 35867 |
| B. | 81000 |
| C. | 82445 |
| D. | 66099 |
| Answer» D. 66099 | |
| 175. |
Find the annual equivalent worth for the following infinite cash flow series at an interest rate of 10%: |
| A. | 461.2 |
| B. | 445.2 |
| C. | 985.4 |
| D. | 438.6 |
| Answer» D. 438.6 | |
| 176. |
Your firm has purchased an injection molding machine at a cost of $100,000. The machine’s useful life is estimated at 8 years. Your accounting department has estimated the capital cost for this machine at about $25,455 per year. If your firm’s MARR is 20%, how much salvage value do you think the accounting department assumed at the end of 8 years? |
| A. | 12000 |
| B. | 9000 |
| C. | 10000 |
| D. | 11000 |
| Answer» C. 10000 | |
| 177. |
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 | |
| 178. |
The following infinite cash flow series has a rate of return of 10%. Determine the unknown value of X. |
| A. | 120 |
| B. | 100 |
| C. | 82 |
| D. | 90 |
| Answer» D. 90 | |
| 179. |
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.
|
| A. | 82000 |
| B. | 90000 |
| C. | 64000 |
| D. | 60000 |
| Answer» C. 64000 | |
| 180. |
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. | 0.1 |
| B. | 0.15 |
| C. | 0.2 |
| D. | 0.3 |
| Answer» B. 0.15 | |
| 181. |
For an employee in receipt of hostel expenditure allowance for his three children, the maximum annual allowance exempt under section 10(14) is |
| A. | rs.10, 800 |
| B. | rs.7,200 |
| C. | rs.9,600 |
| D. | rs.3,600 |
| Answer» B. rs.7,200 | |
| 182. |
For an industrial undertaking fulfilling the conditions, additional depreciation in respect of 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 | |
| 183. |
A.O.P should consist of : |
| A. | individual only |
| B. | persons other thanindividual only |
| C. | both the above |
| D. | none of the above |
| Answer» C. both the above | |
| 184. |
Body of individual should consist of : |
| A. | individual only |
| B. | persons other thanindividual only |
| C. | both the above |
| D. | none of the above |
| Answer» A. individual only | |
| 185. |
A new business was set up on15-11-2008 and it commenced its business from 1-12-2008. The first previous year in this case shall be: |
| A. | 15-11-2008 to 31-3-2009 |
| B. | 1-12-2008 to 31-3-2009 |
| C. | 2008-2009 |
| D. | none of the above |
| Answer» A. 15-11-2008 to 31-3-2009 | |
| 186. |
A person leaves India permanently on 15-11-2008.The assessment year for income earned till 15-11-2008 in this case shall be: |
| A. | 2007-08 |
| B. | 2008-09 |
| C. | 2009-10 |
| D. | none of the above |
| Answer» B. 2008-09 | |
| 187. |
As per section 30, which expenditure incurred for a building used for the business or profession shall not be allowed as deduction? |
| A. | rent, rates and taxes |
| B. | insurance of building |
| C. | repairs of building |
| D. | capital expenditure |
| Answer» D. capital expenditure | |
| 188. |
Group of assets falling within a class of assets comprising of tangible & intangible assets is known as : |
| A. | group of assets |
| B. | block of assets |
| C. | set of assets |
| D. | none of these |
| Answer» B. block of assets | |
| 189. |
Depreciation available, if the asset is used for less than 180 days during the year of acquisition shall be of block rate: |
| A. | 50% |
| B. | 20% |
| C. | 100% |
| D. | 15% |
| Answer» A. 50% | |
| 190. |
If the Plant & Machinery is used for less than 180 days in the year of its acquisition, then, at what rate the depreciation on that asset should be provided under section 32? |
| A. | 7.5% |
| B. | 15% |
| C. | 20 |
| D. | 10% |
| Answer» A. 7.5% | |
| 191. |
If the machinery is purchased on 4th October, 2018 then at what rate depreciation will be provided on it? |
| A. | 60% |
| B. | 7.5% |
| C. | 15% |
| D. | 10% |
| Answer» B. 7.5% | |
| 192. |
The transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in the sale is known as : |
| A. | lump sum sale |
| B. | slump sale |
| C. | aggregate sale |
| D. | total sale |
| Answer» B. slump sale | |
| 193. |
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% | |
| 194. |
Rate of depreciation chargeable on temporary wooden structure for the assessment year 2019- 20 is - A. 40% B. 10% C. 100% D. 50%. |
| A. | 40% |
| B. | 10% |
| C. | 100% |
| D. | 50% |
| Answer» A. 40% | |
| 195. |
DS acquired a building for Rs. ` 15 lakh in June, 2016 in addition to cost of land beneath the building of ` 3 lakh. It was used for personal purposes until he commenced business in June, 2018 and since then it was used for business purposes. The amount of depreciation eligible in his case for the assessment year 2019-20 would be - |
| A. | rs.1,50,000 |
| B. | rs.75,000 |
| C. | rs.37,500 |
| D. | rs.1,21,500 |
| Answer» C. rs.37,500 | |
| 196. |
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%.
|
| 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 | |
| 197. |
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. | |
| 198. |
Which of the following statements is correct? |
| A. | over a project’s life, a typical business will generate a greater amount of total project cash flows (undiscounted) if a faster depreciation method is adopted. |
| B. | no matter which depreciation method you adopt, total tax obligations over a project’s life remain unchanged. |
| C. | depreciation recapture equals cost basis minus an asset’s book value at the time of disposal, that is, if the salvage value is less than the asset’s cost basis. |
| D. | cash flows normally include depreciation expenses since they represent a cost of doing business. |
| Answer» B. no matter which depreciation method you adopt, total tax obligations over a project’s life remain unchanged. | |
| 199. |
You purchased a computer system which cost $50,000 5 years ago. At that time, the system was estimated to have a service life of 5 years with salvage value of $5,000. These estimates are still good. The property has been depreciated according to a 5 year MACRS property class. Now (at the end of year 5 from purchase) you are considering selling the computer at $10,000. What book value should you use in determining the taxable gains? |
| A. | 8640 |
| B. | 5760 |
| C. | 10368 |
| D. | 11520 |
| Answer» B. 5760 | |
| 200. |
Gilbert Corporation had a gross income of $500,000 in tax year 1, $150,000 in salaries, $30,000 in wages, $20,000 in interest, and $60,000 in depreciation expenses for an asset purchased 3 years ago. Ajax Corporation has a gross income of $500,000 in tax year 1, and $150,000 in salaries, $90,000 in wages, and $20,000 in interest expenses. Apply the current tax rates and determine which of the following statements is correct. |
| A. | both corporations will pay the same amount of income taxes in year 1. |
| B. | both corporations will have the same amount of net cash flows in year 1. |
| C. | ajax corporation will have a larger net cash flow than gilbert in year 1. |
| D. | gilbert corporation will have a larger taxable income than ajax corporation in year 1. |
| Answer» C. ajax corporation will have a larger net cash flow than gilbert in year 1. | |
Done Studing? Take A Test.
Great job completing your study session! Now it's time to put your knowledge to the test. Challenge yourself, see how much you've learned, and identify areas for improvement. Don’t worry, this is all part of the journey to mastery. Ready for the next step? Take a quiz to solidify what you've just studied.