Civil Engineering : Engineering Economy MCQs with Answers

1 .
What is the basic accounting equation?
A)  Owner’s equity = assets + liability
B)  Assets = liability + owner’s equity
C)  Owner’s equity = liability - assets
D)  Liability = assets + owners’ equity

Correct Answer :   Assets = liability + owner’s equity

2 .
The more critical (or severe) test of the firm's liquidity can be judged by :
A)  Debts ratio
B)  Current ratio
C)  Liquidity ratio
D)  Acid-Test (or Quick) ratio

Correct Answer :   Acid-Test (or Quick) ratio

3 .
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 un realistic 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 the above

Correct Answer :   All of the above

4 .
Perfect monopoly exists only if :
A)  the single vendor is the only one who has the permit to sell
B)  the single vendor gets the absolute franchise of the product
C)  the single vendor can prevent the entry of all other vendors in the market
D)  the single vendor is the only one who has the knowledge of the product

Correct Answer :   the single vendor can prevent the entry of all other vendors in the market

5 .
What refers to the need, want or desire for a product backed by the money to purchase it?
A)  Demand
B)  Supply
C)  Good
D)  Product

Correct Answer :   Demand

6 .
Which one of the following is included in financial ratios of the firm ?
A)  Liquidity ratio
B)  Turnover ratio
C)  Profitability ratio
D)  All of the above

Correct Answer :   All of the above

Explanation :

* Liquidity ratio
* Turnover ratio
* Profitability ratio
* Ratio of overall performances

7 .
Keeping in view, the feasibility order of magnitude, the preliminary, conceptual or budget estimates, are prepared by :
A)  architect/engineer
B)  owner himself/herself
C)  construction manager
D)  None of the above

Correct Answer :   owner himself/herself

8 .
The estimate based on a detailed quantity survey and furnishes the most accurate and reliable estimate possible is known as
A)  Definitive estimate
B)  Conceptual estimate
C)  Probabilistic estimate
D)  None of the above

Correct Answer :   Definitive estimate

9 .
The ratio of current assests to current liabilities is known as
A)  Debts ratio
B)  Liquidity ratio
C)  Current ratio
D)  Acid-Test (or Quick) ratio

Correct Answer :   Current ratio

10 .
Under ordinary simple interest, how many days in one year?
A)  300
B)  360
C)  365
D)  366

Correct Answer :   360

11 .
Liquidity ratios are used :
A)  to measure a firms ability to meet short-cut obligations.
B)  to compare short term obligations to short-term resources available to meet these obligations.
C)  to obtain much insight into the present cash solvency of the firm and the firm's ability to remain solvent in the event of adversity.
D)  All of the above

Correct Answer :   All of the above

12 .
If a seller recovers his capital along with accumulated compensating interest not in one single lumpsum payment but in periodical equal payments, over time :
A)  Present work Annuity is availed
B)  Sinking Fund Annuity is availed
C)  Capital Recovery Annuity fs availed
D)  None of the above

Correct Answer :   Capital Recovery Annuity fs availed

13 .
A project construction cost estimate includes:
A)  the profit of the contractor
B)  the labour and material cost
C)  the equipment and over head cost
D)  All of the above

Correct Answer :   All of the above

14 .
The CRF (ep) is also known as: [CRF(EP) - 8% - 7], where _____
A)  Money is borrowed for n = 7 years
B)  8% is the rate of interest per year
C)  Both (A) and (B)
D)  Neither (A) nor (B)

Correct Answer :   Both (A) and (B)

15 .
What is a secondary book of accounts, the information of which is obtained from the journal is called?
A)  Worksheet
B)  Ledger
C)  Trial balance
D)  Balanced sheet

Correct Answer :   Ledger

16 .
Ratio analysis of a construction firm is used for analysis by :
A)  share holders
B)  firm's management
C)  Banks of the firm
D)  All of the above

Correct Answer :   All of the above

Explanation :

* share holders
* firm's management
* Banks of the firm
* financial analysts

17 .
A construction estimate is used
A)  to produce a statement of the approximate cost
B)  to judge tentatively or approximate value of the project
C)  to decide an approximation of the value of the project and not the exact cost.
D)  None of the above

Correct Answer :   to decide an approximation of the value of the project and not the exact cost.

18 .
The ratio obtained by dividing 'quick assests' by current liabilities is called
A)  Acid test ratio
B)  Solvency ratio
C)  Turnover ratio
D)  None of the above

Correct Answer :   Acid test ratio

19 .
Pick up the method used for project evaluation and selection in capital budgetting from the following :
A)  Net present worth
B)  pay back period
C)  Internal ratio of return
D)  All of the above

Correct Answer :   All of the above

20 .
Pick up the element of the cost from the following :
A)  Over head
B)  direct labour
C)  direct material
D)  All of the above

Correct Answer :   All of the above

21 .
The estimator for definitive estimates must be able :
A)  and an all-around construction expert.
B)  to express the job material requirements in dimensions suitable for costing and construction supplies.
C)  to read the plans and specifications to determine accurate quantities of permanent materials and installed Equipment.
D)  None of the above

Correct Answer :   to express the job material requirements in dimensions suitable for costing and construction supplies.

22 .
Which one of the following is included in financial ratios of the firm?
A)  Turnover ratio
B)  Liquidity ratio
C)  Profitability ratio
D)  All of the above

Correct Answer :   All of the above

23 .
The construction manager uses the estimate of the project
A)  to develop bids on the project.
B)  to tell the owner of the project to take his/her financial decision.
C)  to advise the architect/engineer regarding design cost parameter especially in value engineering analysis.
D)  All of the above

Correct Answer :   All of the above

24 .
The sunk costs include :
A)  a past expenditure
B)  an unrecovered balance
C)  an invested capital that cannot be retreived
D)  All of the above

Correct Answer :   All of the above

25 .
If a is the base amount expenditure, b is the increase in the operation cost each year over a period of n years, the total cost of maintenance is :
A)  a + (n - 1) b
B)  a - (n - 1) b
C)  a + (n + 1) b
D)  a x (n - 1) b

Correct Answer :   a + (n - 1) b

26 .
Both architect and engineer make use of the cost estimate of the project:
A)  for site selection
B)  for choosing alternatives
C)  for designing of the project
D)  All of the above

Correct Answer :   All of the above

27 .
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 cubic metre method
C)  Cost per linear metre method
D)  Cost per square metre method

Correct Answer :   Cost per linear metre method

28 .
The person desires to pay off the amount in 10 equal annual instalments. The amount of each instalment is :
A)  Rs 7738
B)  Rs 5638
C)  Rs 6638
D)  None of the above

Correct Answer :   Rs 5638

29 .
Mahesh deposits Rs 1200 now, Rs 800 two years from now and Rs 1000 five years from now. If the savings bank's rate of interest in 5%, she will receive an amount of Rs X 10 years from now, where X is
A)  Rs 3415
B)  Rs 4225
C)  Rs 4413
D)  Rs 4826

Correct Answer :   Rs 4413

30 .
Pick up the correct method adopted for developing the approximate or conceptual estimates from the following :
A)  Cost per linear unit
B)  Cost per square metre
C)  Cost per function method
D)  All of the above

Correct Answer :   All of the above

31 .
The alternatives which are standalone solutions for given situations in engineering involve :
A)  a purchase cost (first cost)
B)  the anticipated life of the assest
C)  the yearly costs of maintaining the assest (annual maintenance and operating cost)
D)  All of the above

Correct Answer :   All of the above

32 .
Pick up the main purpose of project cost control from the following :
A)  To promote cost consciousness
B)  To provide a feed back to the estimator
C)  To signal immediate warning of uneconomic operations
D)  All of the above

Correct Answer :   All of the above

33 .
The financial analysis :
A)  helps to judge the success of the firm's financial plans.
B)  helps a bank to know the financial position of the firm for granting a loan to the firm.
C)  helps a share holder to compare the expected return on his investment in the firm against the expected return from other alternative investment.
D)  All of the above

Correct Answer :   All of the above

34 .
Pick up the ratio which gives us sufficient information by which to judge the financial condition and performance of the firm, from the following:
A)  Portability
B)  Activity ratio
C)  Financial leverage ratio
D)  None of the above

Correct Answer :   None of the above

35 .
If P is principal amount, i is the rate of interest and n is the number of periods in years, then the interest factor is :
A)  (1 + ni)
B)  (ni - 1)
C)  ni
D)  None of the above

Correct Answer :   (1 + ni)

36 .
The interest calculated on the basis of 365 days a year, is known as :
A)  interest
B)  exact simple interest
C)  ordinary simple interest
D)  None of the above

Correct Answer :   exact simple interest

37 .
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 the above

Correct Answer :   To keep the project cost within the cost budget and knowing when and where job costs are deviating.

38 .
The project contractor relies on the cost of the estimate :
A)  for a unit price contract
B)  for submission of a competitive bid for a lumpsum contract
C)  for preparation of a definitive estimate to help negotiate contract.
D)  All of the above

Correct Answer :   All of the above

39 .
The wages of supervisors and material handlers are charged as :
A)  Over head
B)  direct labour cost
C)  indirect labour cost
D)  None of the above

Correct Answer :   Over head

40 .
Annuities involve _________
A)  a series of payments
B)  all payments of equal amount
C)  payments at the end of periods
D)  All of the above

Correct Answer :   All of the above

Explanation :

* a series of payments
* all payments of equal amount
* payment at equal time intervals
* payments at the end of periods.

41 .
The annuity which refers to a debt payment for recovering the initial amount or capital in equal periodical payments, is known as;
A)  Compound annuity
B)  Capital recovery annuity
C)  Sinking fund annuity
D)  Present Worth Annuity

Correct Answer :   Capital recovery annuity

42 .
The product of CAF (S P) and PWF (S P) is:
A)  1
B)  1/2
C)  1/3
D)  1/4

Correct Answer :   1

43 .
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 the above

Correct Answer :   All of the above

Explanation :

* Time 0 is considered to be the present
* Time 1 is considered to be the end of time period 1
* A vertical arrow pointing up indicates a positive cash flow
* An arrow pointing downward indicates a negative cash flow

44 .
A young engineer borrowed P 10,000 at 12% interest and paid P 2,000 per annum for the last 4 years. What does he have to pay at the end of the fifth year in order to pay off his loan?
A)  P 6,222.39
B)  P 6,292.93
C)  P 6,922.93
D)  P 6,999.39

Correct Answer :   P 6,922.93

45 .
What is a government bond which has an indefinite life rather than a specific maturity?
A)  T-bill
B)  Consol
C)  Coupon
D)  Debenture

Correct Answer :   Consol

46 .
Using factor method, the depletion at any given year is equal to:
A)  Initial cost of property divided by the total units in property
B)  Initial cost of property times number of units sold during the year
C)  Initial cost of property times number of unit sold during the year divided by the total units in property
D)  Initial cost of property divided by the number of units sold during the year

Correct Answer :   Initial cost of property times number of unit sold during the year divided by the total units in property

47 .
What are the common methods of computing depletion charge?
A)  Unit method and percentage method
B)  Rational method and irrational method
C)  Conservative method and conventional method
D)  Discrete method and depletion allowance method

Correct Answer :   Unit method and percentage method

48 .
A factory operator bought a diesel generator set for P 10,000.00 and agreed to pay the dealer uniform sum at the end of each year for 5 years at 8% interest compounded annually, that the final payment will cancel the debt for principal and interest. What is the annual payment?
A)  P 2,540.56
B)  P 2,544.45
C)  P 2,500.57
D)  P 2,504.57

Correct Answer :   P 2,504.57

49 .
What refers to the goods and services that are desired by human and will be acquired only after all the needs have been satisfied?
A)  Necessity
B)  Luxury
C)  Producer products
D)  Consumer products

Correct Answer :   Necessity

50 .
A form of business organization in which a person conducts his business alone and entirely for his own profit, being solely responsible for all its activities and liabilities.
A)  Partnership
B)  Sole proprietorship
C)  Corporation
D)  Entrepreneurship

Correct Answer :   Sole proprietorship

51 .
A man loans P 187,400 from a bank with interest at 5% compounded annually. He agrees to pay his obligations by paying 8 equal annual payments, the first being due at the end of 10 years. Find the annual payments.
A)  P 43,489.47
B)  P 43,263.91
C)  P 43,763.20
D)  P 43,600.10

Correct Answer :   P 43,763.20

52 .
Earnings per share is the most important ratio for
A)  Banks
B)  Share holders
C)  Company's management
D)  All of the above

Correct Answer :   All of the above

53 .
Shell Philippines, a multinational company, has a total gross income for a particular year of P 50,000,000. The taxable income after taking all deductions except for depletion is P 18,500,000. What is the allowable depletion allowance for that particular year? Take percentage of gross income for oil as 22%.
A)  P 9,228.45
B)  P 9,250.00
C)  P 9,308.45
D)  P 9,358.41

Correct Answer :   P 9,250.00

54 .
What annuity is required over 12 years to equate with a future amount of P 20,000? Assume i= 6% annually.
A)  P 1,185.54
B)  P 1,107.34
C)  P 1,290.34
D)  P 1,205.74

Correct Answer :   P 1,185.54

55 .
What is the reduction in the money value of capital asset is called?
A)  Loss
B)  Deficit
C)  Capital loss
D)  Capital expenditure

Correct Answer :   Capital loss

56 .
What is the increase in the money value of a capital asset is called?
A)  Profit
B)  Capital gain
C)  Capital stock
D)  Capital expenditure

Correct Answer :   Capital gain

57 .
What is the term for an annuity with a fixed time span?
A)  Annuity certain
B)  Perpetuity
C)  Annuity due
D)  Ordinary annuity

Correct Answer :   Annuity certain

58 .
What type of bond is issued jointly by two or more corporations?
A)  Trust bond
B)  Tie-up bond
C)  Mortgage bond
D)  Joint bond

Correct Answer :   Joint bond

59 .
A telephone switchboard 100 pair cable can be made up with either enameled wire or tinned wire. There will be 400 soldered connections. The cost of soldering a connection on the enameled wire will be P 1.65 on the tinned wire, it will be P 1.15. A 100- pair cable made up with enameled wire cost P 0.55 per linear foot and those made up of tinned wire cost P 0.75 per linear foot. Determine the length of cable run in feet so that the cost of each installation would be the same.
A)  1,120 feet
A)  
B)  1,100 feet
B)  
C)  1,040 feet
C)  
D)  1,000 feet
D)  

Correct Answer :   1,000 feet

60 .
What refers to the present worth of the probable future net earnings?
A)  Earning value
B)  Going concern value
C)  Total fair value
D)  Total market value

Correct Answer :   Earning value

61 .
A loan for P50,000 is to be paid in 3 years at the amount of P65,000. What is the effective rate of money?
A)  9.41 %
B)  9.31 %
C)  9.14 %
D)  9.01 %

Correct Answer :   9.14 %

62 .
What refers to the present worth of cost associated with an asset for an infinite period of time?
A)  Annual cost
B)  Capitalized cost
C)  Operating cost
D)  Increment cost

Correct Answer :   Capitalized cost

63 .
The interest calculated on the basis of 365 days a year, is known as:
A)  Interest
B)  Exact simple interest
C)  Ordinary simple interest
D)  None of the above

Correct Answer :   Exact simple interest

64 .
Ratio analysis of a construction firm is used for analysis by:
A)  Banks of the firm
B)  Firm's management
C)  Share holders
D)  Financial analysts

Correct Answer :   Financial analysts

65 .
A farmer selling eggs at 50 pesos a dozen gains 20%. If he sells the eggs at the same price after the costs of the eggs rises by 12.5%, how much will be his new gain in percent?
A)  6.65 %
B)  6.58 %
C)  6.12 %
D)  6.89 %

Correct Answer :   6.65 %

66 .
What is the main reason why the sinking fund method of computing depreciation is seldom used in the industry?
A)  Unstable economy
B)  The initial deprecation is high
C)  The initial depreciation is low
D)  Rate of interest cannot be exactly determined

Correct Answer :   The initial depreciation is low

67 .
“When one of the factors of production is fixed in quantity or is difficult to increase, increasing the other factors of production will result in a less than proportionate increase in output”. This statement is known as the:
A)  Law of demand
B)  Law of supply
C)  Law of diminishing return
D)  Law of supply and demand

Correct Answer :   Law of diminishing return

68 .
What rate of interest compounded annually is the same as the rate of interest of 8% compounded quarterly?
A)  8.07 %
B)  8.12 %
C)  8.16 %
D)  8.24 %

Correct Answer :   8.24 %

69 .
If there are many sellers and few buyers, the market situation is _________ .
A)  Duopsony
B)  Oligopsony
C)  Monopoly
D)  Oligopoly

Correct Answer :   Oligopsony

70 .
What is defined as any tangible economic product that contributes directly or indirectly to the satisfaction of human want?
A)  Goods or commodities
B)  Goods
C)  Services
D)  Commodities

Correct Answer :   Goods or commodities

71 .
What is normally used to compare alternatives that accomplish the same purpose but have unequal lives?
A)  MARR
B)  Annual cost method
C)  Present worth method
D)  Capitalized cost method

Correct Answer :   Annual cost method

72 .
An asset is purchased for P 9,000.00. Its estimated economic life is 10 years after which it will be sold for P 1,000.00. Find the depreciation in the first three years using sum-of-years digit method
A)  P 3,279.27
B)  P 3,729.27
C)  P 3,927.27
D)  P 3,792.72

Correct Answer :   P 3,927.27

73 .
What is another term for "perfect competition"?
A)  No-limit competition
B)  Heterogeneous market
C)  Free-for-all competition
D)  Atomistic competition

Correct Answer :   Atomistic competition

74 .
What is the feature of some bonds whereby the issuer can redeem it before it matures?
A)  Callability
B)  Call class
C)  Recall clause
D)  Return clause

Correct Answer :   Callability

75 .
"Under conditions of perfect competition, the price at which any given product will be supplied and purchased is the price that will result in the supply and the demand being equal." This statement is known as the:
A)  Law of supply and demand
B)  Law of demand
C)  Law of supply
D)  Law of diminishing return

Correct Answer :   Law of supply and demand

76 .
Which is NOT an essential element of an ordinary annuity?
A)  The amounts of all payments are equal.
B)  The first payment is made at the beginning of the first period.
C)  The payments are made at equal interval of time.
D)  Compound interest is paid on all amounts in the annuity.

Correct Answer :   The first payment is made at the beginning of the first period.

77 .
Is an artificial being created by operation of law, having the right of succession and the process, attributes and properties expressly authorized by the law or incident to its existence.
A)  Property
B)  Partnership
C)  Corporation
D)  Organization

Correct Answer :   Corporation

78 .
In what method of computing depreciation where it assumes that the loss in value is directly proportional to the age of the equipment or asset?
A)  Sinking fund method
B)  Straight line method
C)  Declining balance method
D)  Sum-of-year digit method

Correct Answer :   Straight line method

79 .
What refers to the cumulative effect of elapsed time on the money value of an event, based on the earning power of equivalent invested funds capital should or will earn?
A)  Yield
B)  Interest rate
C)  Present worth factor
D)  Time value of money

Correct Answer :   Time value of money

80 .
A leading shoe manufacturer produces a pair of Lebron James signature shoes at a labor cost of P 900.00 a pair and a material cost of P 800.00 a pair. The fixed charges on the business are P 5,000,000 a month and the variable costs are P 400.00 a pair. Royalty to Lebron James is P 1,000 per pair of shoes sold. If the shoes sell at P 5,000 a pair, how many pairs must be produced each month for the manufacturer to break-even?
A)  2,632
A)  
B)  2.590
B)  
C)  2,712
C)  
D)  2,890
D)  

Correct Answer :   2,632

81 .
Duopsony is a market situation where there is/are:
A)  Many sellers and few buyers
B)  Few sellers and few buyers
C)  One seller and few buyers
D)  Few sellers and many buyers

Correct Answer :   Many sellers and few buyers

82 .
The deliberate lowering of the price of a nation’s currency in terms of the accepted standard (Gold, American dollar or the British pound) is known as ______.
A)  Currency float
B)  Currency appreciation
C)  Currency depreciation
D)  Currency devaluation

Correct Answer :   Currency devaluation

83 .
The true value of interest rate computed by equations for compound interest for a 1 year period is known as ______.
A)  Nominal interest
B)  Expected return
C)  Effective interest
D)  Economic return

Correct Answer :   Effective interest

84 .
Salvage value is sometimes known as ______.
A)  Junk value
B)  Second-hand value
C)  Scrap value
D)  Going value

Correct Answer :   Second-hand value

85 .
The ability to convert assets to cash quickly is known as ______.
A)  Leverage
B)  Solvency
C)  Liquidity
D)  Insolvency

Correct Answer :   Liquidity

86 .
The depletion allowance method of computing depletion is commonly known as ______.
A)  Percentage method
B)  Factor method
C)  Sinking fund method
D)  Unit method

Correct Answer :   Percentage method

87 .
Pick up the correct reason for making conceptual (or preliminary) estimate from the following:
A)  To have a check on a definitive cost estimate
B)  To check quotations from contractors and/or sub-contractors
C)  To compute target estimate for the owner while drawing and specifications are in initial stage
D)  All of the above

Correct Answer :   All of the above

88 .
What is considered as the standard unit which forms the basis of a country's domestic money supply?
A)  Currency
B)  Cash or check
C)  Monetary unit
D)  Foreign exchange

Correct Answer :   Foreign exchange

89 .
Duopoly is a market situation where there is/are:
A)  One seller and few buyers
B)  Few sellers and many buyers
C)  Few sellers and few buyers
D)  Many sellers and few buyers

Correct Answer :   Few sellers and many buyers

90 .
What is the present worth of two P 100 payments at the end of the third year and fourth year? The annual interest rate is 8%.
A)  P 150.56
B)  P 151.09
C)  P 152.88
D)  P 153.89

Correct Answer :   P 152.88

91 .
A manufacturing firm maintains one product assembly line to produce signal generators. Weekly demand for the generators is 35 units. The line operates for 7 hours per day, 5 days per week. What is the maximum production time per unit in hours required of the line to meet the demand?
A)  1.0 hour per unit
A)  
B)  1.2 hours per unit
B)  
C)  1.4 hours per unit
C)  
D)  1.6 hours per unit
D)  

Correct Answer :   1.0 hour per unit

92 .
What is a stock of a product which is held by a trade body or government as a means of regulating the price of that product?
A)  Buffer stock
B)  Hoard stock
C)  Withheld stock
D)  Stock pile

Correct Answer :   Buffer stock

93 .
What market situation exists where there is only one buyer and only one seller?
A)  Monopoly
B)  Bilateral monopoly
C)  Monopsony
D)  Bilateral monopsony

Correct Answer :   Bilateral monopoly

94 .
What is defined as the reduction or fall of the value of an asset due to constant use and passage of time?
A)  Inflation
B)  Deflation
C)  Depletion
D)  Depreciation

Correct Answer :   Depreciation

95 .
What type of depreciation is due to the reduction of the physical ability of an equipment or asset to produce results?
A)  Demand depreciation
B)  Design depreciation
C)  Functional depreciation
D)  Physical depreciation

Correct Answer :   Physical depreciation

96 .
First Benchmark Publishing’s gross margin is 50% of sales. The operating costs of the publishing are estimated at 15% of sales. If the company is within the 40% tax bracket, determine the percent of sales is their profit after taxes?
A)  21 %
B)  20 %
C)  19 %
D)  18 %

Correct Answer :   21 %

97 .
Pick up the correct statement regarding financial statement analysis from the following.
A)  The balance sheet is the summary of assets, liabilities and owner's equity of business at a point in time
B)  The income statement is the summary of revenues and expenses of a firm over a particular period of time
C)  Final analysis always involves the use of various financial statements i.e., balance sheet and income statement
D)  All of the above

Correct Answer :   All of the above

98 .
What are the two classifications of goods and services?
A)  Raw and finished
B)  Consumer and producer
C)  Local and imported
D)  Ready-made and made-to-order

Correct Answer :   Consumer and producer

99 .
What refers to an imaginary cost representing what will not be received if a particular strategy is rejected?
A)  Null cost
B)  Ghost cost
C)  Opportunity cost
D)  Horizon cost

Correct Answer :   Opportunity cost

100 .
What is the type of annuity where the payments are made at the end of each period starting from the first period?
A)  Perpetuity
B)  Annuity due
C)  Ordinary annuity
D)  Deferred annuity

Correct Answer :   Ordinary annuity

101 .
What type of depreciation is due to the reduction in the demand for the function that the equipment or asset was designed to render?
A)  Functional depreciation
B)  Design depreciation
C)  Demand depreciation
D)  Physical depreciation

Correct Answer :   Functional depreciation

102 .
What method is often used in municipal project evaluations where benefits and costs accrue to different segments of the community?
A)  EUAC
B)  Annual cost method
C)  Rate of return method
D)  Benefit-cost ratio

Correct Answer :   Benefit-cost ratio

103 .
What refers to the present worth of all the amount the bondholder will receive through his possession of the bond?
A)  Face value of bond
B)  Value of bond
C)  Par value of bond
D)  Redeemed value of bond

Correct Answer :   Value of bond

104 .
What represents the share of participation in business organizations?
A)  Stock
B)  Franchise
C)  Partnership
D)  Corporation

Correct Answer :   Stock

105 .
What market situation exists where there are few sellers and few buyers?
A)  Oligopsony
B)  Oligopoly
C)  Bilateral Oligopoly
D)  Bilateral Oligopsony

Correct Answer :   Bilateral Oligopoly

106 .
An amount of P1,000 becomes P1,608.44 after 4 years compounded bimonthly. Find the nominal interest.
A)  11.89 %
B)  12.00 %
C)  12.08 %
D)  12.32 %

Correct Answer :   12.00 %

107 .
What denotes in the fall in the exchange rate of one currency in terms of the others? This term is usually applies to the floating exchange rate.
A)  Currency float
B)  Currency devaluation
C)  Currency appreciation
D)  Currency depreciation

Correct Answer :   Currency depreciation

108 .
In what method of computing depreciation where it assumes that the annual cost of depreciation is a fixed percentage of the book value at the beginning of the year?
A)  Sinking fund method
B)  Straight line method
C)  Sum-of-year digit method
D)  Declining balance method

Correct Answer :   Declining balance method

109 .
What stock represents ownership and enjoys certain preferences than ordinary stock?
A)  Preferred stock
B)  Presidential stock
C)  Authorized stock
D)  Incorporator’s stock

Correct Answer :   Preferred stock

110 .
What refers to a document that shows proof of legal ownership of a financial security?
A)  Check
B)  Bond
C)  Coupon
D)  Bank note

Correct Answer :   Coupon

111 .
A P 1, 000, 6% bond pays dividend semiannually and will be redeemed at 110% on June 21, 204. It is bought on June 21, 2001 to yield 4% interest. Find the price of the bond.
A)  P 1,133.78
B)  P 1,144.81
C)  P 1,122.70
D)  P 1,155.06

Correct Answer :   P 1,144.81

112 .
What is defined as an entity which makes product, good or services available to buyer or consumer in exchange of monetary consideration?
A)  Seller
B)  Producer
C)  Manufacturer
D)  Buyer or consumer

Correct Answer :   Producer

113 .
What type of bond which can be redeemed before maturity date?
A)  Callable bond
B)  Registered bond
C)  Preferred bond
D)  Incorporators bond

Correct Answer :   Callable bond

114 .
What is another term for "unit method" for computing depletion?
A)  Percentage method
B)  Initial cost method
C)  Sinking fund method
D)  Factor method

Correct Answer :   Factor method

115 .
How long will it take money to double itself if invested at 5% compounded annually?
A)  15.3 years
B)  14.7 years
C)  14.2 years
D)  13.7 years

Correct Answer :   14.2 years

116 .
Gross margin is the ratio of the gross profit to ______.
A)  Net sale
B)  Quick assets
C)  Owner’s equity
D)  Inventory turnover

Correct Answer :   Net sale

117 .
The functional depreciation is sometimes called ______.
A)  Life depreciation
B)  Adolescence
C)  Demand depreciation
D)  Failure depreciation

Correct Answer :   Adolescence

118 .
What is defines as the analysis and evaluation of the monetary consequences by using the theories and principles of economics to engineering applications, designs and projects?
A)  Engineering economy
B)  Design cost analysis
C)  Engineering cost analysis
D)  Economic Analysis

Correct Answer :   Economic Analysis

119 .
Under the depletion allowance method in computing depreciation, the depletion charge is equal to either ______ whichever is smaller.
A)  Fixed percentage of gross income or the net taxable income
B)  Fixed percentage of gross income or 50% of the net taxable income
C)  50% of the fixed percentage of gross income or the net taxable income
D)  50% of the fixed percentage of gross income or 50% of the net taxable income

Correct Answer :   Fixed percentage of gross income or 50% of the net taxable income

120 .
A P 1,000,000 issue of 3%, 15-year bond was sold at 95%. What is the rate of interest of this investment?
A)  3.7%
B)  4.0%
C)  3.0%
D)  3.4%

Correct Answer :   3.0%

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