Engineering Economy MCQs

1.What type of business structure involves an individual running the enterprise independently, bearing full responsibility for all operations and debts, and retaining all profits?

2.What is the term used for the factor represented by the formula \[ \frac{i(1+i)^n}{(1+i)^n - 1} \]?

Uniform series sinking fund factorCapital recovery factorPresent worth of a single payment factorFuture worth of a uniform gradient factor

3.What is the term used for the factor represented by the formula (1 + i)^-n?

Future value of a uniform gradient seriesRecovery of capital costPresent worth factor for a single paymentCompound amount factor for a single payment

4.Why is the sinking fund method of calculating depreciation rarely adopted in practice?

Due to economic fluctuationsBecause the exact interest rate is difficult to ascertainIt results in a high depreciation expense at the startIt produces a low depreciation charge initiallyNone of the above

5.Which term describes a hypothetical expense that reflects the benefits lost when a specific option is not chosen?

6.Which technique is commonly applied in assessing municipal projects when the advantages and expenses impact various community groups?

7.Which approach is typically employed to evaluate different options that serve the same function but have varying lifespans?

Method of capitalized costPresent value techniqueAnnual cost approachMinimum acceptable rate of return (MARR)

8.What is another term for the capitalized cost of a project?

Endless costLife cycle costDuration costProject expenditure

9.Which term describes the current value of all expenses related to an asset, calculated over an unlimited time span?

Yearly expenseAdditional costCapitalized costRunning cost

10.What is the term for the depreciation that cannot be recovered because of inaccurate estimates regarding the equipment's lifespan?

11.What is the term for assessing the monetary value of a tangible asset for a particular purpose?

12.When calculating the depreciation of equipment, which of the following should be included in the initial cost?

The equipment's purchase price along with shipping costsCosts related to setting up and installing the equipmentTaxes and fees required at the time of acquisitionAll the above expenses combinedNone of the above

13.What is the initial expense called if the existing equipment had been purchased from a second-hand dealer or another company?

14.What term describes the worth of a non-physical asset that results from a company's exclusive right to offer a particular product or service within a specific geographic area?

15.What term describes the worth of an asset as assessed by an impartial third party, distinct from the buyer and seller, to set a mutually agreeable price?

Ledger valueTrading valueFair valueBrand value

16.What is another term commonly used for salvage value?

17.What term describes the price agreed upon by a willing buyer and a willing seller for a property, assuming neither party is forced to buy or sell?

18.What term is used to describe the mathematical formula representing the present value of an annuity of one?

19.What term describes the present value, after taxes, of all depreciation benefits accumulated throughout an asset's depreciation timeframe?

20.According to the factor method, how is depletion calculated for a specific year?

Multiply the initial property cost by the units sold that year, then divide by the total units available in the propertyDivide the initial property cost by the number of units sold during the yearMultiply the initial property cost by the total units sold in that yearDivide the initial property cost by the total units contained in the property