McqMate
These multiplechoice 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 4year 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 yearend 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 10year 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 5year 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 on15112008 and it commenced its business from 1122008. The ﬁrst previous year in this case shall be: 
A.  15112008 to 3132009 
B.  1122008 to 3132009 
C.  20082009 
D.  none of the above 
Answer» A. 15112008 to 3132009 
186. 
A person leaves India permanently on 15112008.The assessment year for income earned till 15112008 in this case shall be: 
A.  200708 
B.  200809 
C.  200910 
D.  none of the above 
Answer» B. 200809 
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 201920 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 201920 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 1401 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. 
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