Costs (on annual basis) are constant when the straight line method is used for its determination

Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time

Does figure in the calculation of income tax liability on cash flows from an investment

Chemical Engineering Plant Economics MCQ Questions and answers

A

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Q. A shareholder has _________ say in the affairs of company management compared to a debenture holder.

(A) More
(B) Less
(C) Same
(D) No

A

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Q. According to six-tenths-factor rule, if the cost of a given unit at one capacity is known, then the cost of similar unit with ' times the capacity of the first unit is approximately equal to _________ times the cost of the initial unit.

(A) n
(B) n^0.6
(C) n^0.4
(D) √n

A

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Q. Accumulated sum at the end of 5 years, if Rs. 10000 is invested now at 10% interest per annum on a compound basis is Rs.

(A) 15000
(B) 16105
(C) 18105
(D) 12500

A

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Q. An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the

(A) Manufacturing cost
(B) Depreciation by sinking fund method
(C) Discrete compound interest
(D) Cash ratio

A

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Q. An investment of Rs. 100 lakhs is to be made for construction of a plant, which will take two years to start production. The annual profit from the operation of the plant is Rs. 20 lakhs. What will be the payback time?

(A) 5 years
(B) 7 years
(C) 12 years
(D) 10 years

A

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Q. An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be

(A) 1000 (1 + 0.1/4)^20
(B) 1000 (1 + 0.1)^20
(C) 1000 (1 + 0.1/4)^5
(D) 1000 (1 + 0.1/2)^5

A

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Q. Effective and nominal interest rates are equal, when the interest is compounded

(A) Annually
(B) Fortnightly
(C) Monthly
(D) Half-yearly

A

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Q. Direct costs component of the fixed capital consists of

(A) Contingencies
(B) Onsite and offsite costs
(C) Labour costs
(D) Raw material costs

A

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Q. Depreciation is _________ in profit with time.

(A) Decrease
(B) Increase
(C) No change
(D) None of these

A

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Q. Depreciation

(A) Costs (on annual basis) are constant when the straight line method is used for its determination
(B) Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time
(C) Does figure in the calculation of income tax liability on cash flows from an investment
(D) All (A), (B) and (C)

Chemical Engineering Plant Economics MCQs with answers Page - 2

Q. A shareholder has _________ say in the affairs of company management compared to a debenture holder.

Q. According to six-tenths-factor rule, if the cost of a given unit at one capacity is known, then the cost of similar unit with ' times the capacity of the first unit is approximately equal to _________ times the cost of the initial unit.

Q. Accumulated sum at the end of 5 years, if Rs. 10000 is invested now at 10% interest per annum on a compound basis is Rs.

Q. An investment of Rs. 100 lakhs is to be made for construction of a plant, which will take two years to start production. The annual profit from the operation of the plant is Rs. 20 lakhs. What will be the payback time?

Q. An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be

Q. Effective and nominal interest rates are equal, when the interest is compounded

Q. Direct costs component of the fixed capital consists of

Q. Depreciation is _________ in profit with time.

Q. Depreciation

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