Economics for Engineers (3140911) MCQs

MCQs of Present Worth Analysis

Showing 21 to 28 out of 28 Questions
21.
Present worth analysis involves _________.
(a) resolving available alternatives into an equivalent uniform annual cash flow
(b) resolving benefits and costs involved in available alternatives in terms of rate of return
(c) resolving available alternatives into equivalent present consequences
(d) All of the above
Answer:

Option (c)

22.
A project has an initial cost of Rs. 100000 and uniform annual benefits of Rs.12,500. At the end of its 8-year useful life, its salvage value is Rs. 30,000. At a 10% interest rate, the net present worth of the project is approximately
(a) − 19318
(b) 0
(c) 30000
(d) 100000
Answer:

Option (a)

23.
The amount of money deposited 25 years ago at 5% interest that would now provide a perpetual payment of Rs. 15,000 per year is closest to
(a) 86,750
(b) 88,590
(c) 3,00,000
(d) 3,15,000
Answer:

Option (b)

24.
Your grandfather deposits Rs. 50,000 into your savings account that pays 6% interest compounded quarterly. Equal annual withdrawals are to be made from the account beginning 1 year from now and continuing forever. The maximum amount of equal annual withdrawals is approximately
(a) 2,950
(b) 3,000
(c) 3,068
(d) 3,100
Answer:

Option (c)

25.
The amount of money deposited 10 years ago at 8% interest that would now provide a perpetual payment of Rs. 15,000 per year is approximately
(a) 84,250
(b) 86,850
(c) 1,50,000
(d) 1,87,500
Answer:

Option (b)

26.
Machine A has an initial cost of Rs. 6,000 with total annual maintenance costs of Rs. 750. Machine B has an initial cost of Rs. 8,500 with total annual maintenance costs of Rs. 405. At a 10% interest rate, in approximately how many years do the two machines have the same present worth?
(a) Never
(b) 3 years
(c) 8 years
(d) 10 years
Answer:

Option (d)

27.
You borrow Rs 10,000 from your friend at an interest rate of 12% compounded monthly. You agree to pay your friend Rs. 300 per month. Approximately how long will it take for you to pay off your loan assuming that you pay exactly Rs. 300 per month?
(a) 28 months
(b) 33 months
(c) 38 months
(d) 41 months
Answer:

Option (d)

28.
A new project will require Rs. 48,000 a year in maintenance costs after it is complete. These maintenance costs will continue forever. Assume that the funding can be set aside in an account that earns 5% interest per year. What is the lump sum to be set aside now in order to cover the Rs. 48,000 in annual maintenance costs?
(a) 9,45,000
(b) 9,60,000
(c) 10,08,000
(d) 18,00,000
Answer:

Option (b)

Showing 21 to 28 out of 28 Questions