Engineering Economy Online Exam Questions – Set 05

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Q1. Pick up the correct statement from the following:

(A) Engineering economy is a collection of mathematical techniques which simplify economic comparisons
(B) Engineering economy is a decision assistance tool by which one method will be chosen as the most economically one
(C) For understanding the engineering economy, one should be able to classify the basic terminology and fundamental concepts of economy
(D) All of these

Answer: (D) All of these


Q2. The estimate based on a detailed quantity survey and furnishes the most accurate and reliable estimate possible is known as

(A) Conceptual estimate
(B) Definitive estimate
(C) Probabilistic estimate
(D) None of these

Answer: (B) Definitive estimate


Q3. Earnings per share is the most important ratio for

(A) Share holders
(B) Banks
(C) Company’s management
(D) All of these

Answer: (D) All of these


Q4. Pick up the method used for project evaluation and selection in capital budgeting from the following:

(A) Payback period
(B) Internal ratio of return
(C) Net present worth
(D) All the above

Answer: (D) All the above


Q5. In the cash flow diagram shown in the given figure

(A) The first disbursement occurs at the end of year 2
(B) The second disbursement occurs at the end of year 4
(C) The first receipt occurs at the end of year 1
(D) All of these

Answer: (D) All of these


Q6. Pick up the correct statement regarding financial statement analysis from the following.

(A) Final analysis always involves the use of various financial statements i.e., balance sheet and income statement
(B) The balance sheet is the summary of assets, liabilities and owner’s equity of business at a point in time
(C) The income statement is the summary of revenues and expenses of a firm over a particular period of time
(D) All the above

Answer: (D) All the above


Q7. Current ratio is:

(A) Current assets/Current liabilities
(B) (Current assets + loans)/Current liabilities
(C) (Current assets + loans advances)/Current liabilities
(D) None of these

Answer: (A) Current assets/Current liabilities


Q8. Pick up the correct statement from the following:

(A) The capital required to get a project started is the first cost
(B) The first cost is a single cash flow or a series of cash flows that are made in the beginning of the activity’s life span
(C) The first cost of purchasing a car is the sum of the down payment, taxes and dealers charges
(D) All of these

Answer:(D) All of these


Q9. Which one of the following statements is correct?

(A) The number of years required to recover the initial cash investment in a project, is called Pay Back period (PBP)
(B) The discount rate that equates the present value of the expected Net Cash Flows (CFs) with the Initial Cash Outflow (ICO) is known as internal rate of return
(C) The present value of the proposal’s net cash flows, less the proposal’s initial cash outflow is known as the Net Present Value (NPV)
(D) All of these

Answer: (D) All of these


Q10. The CRF (ep) is also known as: [CRF(EP) – 8% – 7], where

(A) 8% is the rate of interest per year
(B) Money is borrowed for n = 7 years
(C) Both (a) and (b)
(D) Neither (a) nor (b)

Answer: (C) Both (a) and (b)


Q11. Probabilistic estimating of a construction project includes:

(A) Labour
(B) Productivity
(C) Wage scale
(D) All of these

Answer:(D) All of these


Q12. Pick up the correct statement from the following:

(A) The difference between sales revenue and cost of goods sold, is known as ‘Gross Profit’
(B) The gross profit percentage is the average profit margin obtained on goods sold
(C) The relationship of contribution to sales is known as contribution ratio
(D) All of these

Answer:(D) All of these


Q13. The alternatives which are standalone solutions for given situations in engineering involve:

(A) A purchase cost (first cost)
(B) The anticipated life of the assets
(C) The anticipated resalable value (salvage value) and the interest return (rate of return)
(D) All of these

Answer: (D) All of these


Q14. The key to profitable operation for project cost control, is:

(A) To keep the project cost equal to original cost estimate
(B) To keep the project cost equal to subsequent construction budget
(C) To keep the project cost within the cost budget and knowing when and where job costs are deviating
(D) None of these

Answer: (C) To keep the project cost within the cost budget and knowing when and where job costs are deviating


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