MCQ Test on Engineering Economy – Set 01

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Q1. In a cash flow series:

(A) Uniform gradient signifies that an income or disbursement changes by the same amount in each interest period
(B) Either an increase or decrease in the amount of a cash flow is called the gradient
(C) The gradient in the cash flow may be positive or negative
(D) All of these

Answer: (D) All of these


Q2. Ratio analysis of a construction firm is used for analysis by:

(A) Share holders
(B) Firm’s management
(C) Banks of the firm
(D) Financial analysts

Answer: (D) Financial analysts


Q3. Pick up the correct statement from the following:

(A) An annuity is a series of equal payments occurring at equal period of time
(B) Annuity is called an equal payment or uniform payment series
(C) An annuity may have periods of time of any length but should always be of equal length
(D) All the above

Answer: (D) All the above


Q4. In a cash-flow diagram:

(A) Time 0 is considered to be the present
(B) Time 1 is considered to be the end of time period 1
(C) A vertical arrow pointing up indicates a positive cash flow
(D) All of these

Answer: (D) All of these


Q5. Current assets less inventories divided by current liabilities is known as

(A) Liquidity ratio
(B) Current ratio
(C) Acid-Test (or Quick) ratio
(D) Debts ratio

Answer: (C) Acid-Test (or Quick) ratio


Q6. The sunk costs include:

(A) A past expenditure
(B) An unrecovered balance
(C) An invested capital that cannot be retrieved
(D) All of these

Answer: (D) All of these


Q7. Which method is adopted to develop an approximate or conceptual estimate for perimeter works for buildings from the following?

(A) Base unit method
(B) Cost per function method
(C) Cost per square metre method
(D) Cost per linear metre method

Answer: (D) Cost per linear metre method


Q8. Refer to the cash flow diagram of uniform gradient in a cash flow (in the given figure), the gradient is:
objectivebooks.com

(A) Rs. 10000 per year
(B) Rs. 15000 per year
(C) Rs. 20000 per year
(D) Rs. 25000 per year

Answer: (D) Rs. 25000 per year


Q9. Pick up the element of the cost from the following:

(A) Direct material
(B) Direct labour
(C) Over head
(D) All of these

Answer: (D) All of these


Q10. Pick up the correct statement from the following:

(A) The ratio of current assets, loans and advances, and the current liquidity is called current ratio
(B) Larger the current ratio, larger is the margin of safety
(C) The operating profit is the difference between gross profit and operating expenses
(D) All of these

Answer: (D) All of these


Q11. Pick up the correct statement from the following:

(A) The change in the amount of money over a given time period is called ‘time value’ of money, a most important concept in engineering economy
(B) The manifestation of the time value of money is termed as interest
(C) Interest on borrowing = present amount owed – original loan
(D) All of these

Answer: (D) All of these


Q12. The ratio obtained by dividing ‘quick assets’ by current liabilities is called

(A) Turnover ratio
(B) Acid test ratio
(C) Solvency ratio
(D) None of these

Answer: (B) Acid test ratio


Q13. The ratio of current assets to current liabilities is known as

(A) Liquidity ratio
(B) Current ratio
(C) Acid-Test (or Quick) ratio
(D) Debts ratio

Answer: (B) Current ratio


Q14. Which one of the following questions is relevant to the construction estimates?

(A) Did the estimators precisely evaluate site conditions
(B) Did the estimators use short cut methods which may be unrealistic in their situation
(C) How much money will the contractor’s risk, loosing if he were to submit bid on the raw estimate of cost
(D) All of these

Answer: (D) All of these


Q15. The construction estimate of a project is used by:

(A) The owner of the facility
(B) The consulting architect/engineer
(C) The contractor of the project
(D) All of these

Answer: (D) All of these


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