Economics for Engineers (3140911) MCQs

MCQs of Present Worth Analysis

Showing 11 to 20 out of 28 Questions
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11.
A machine has an initial cost of Rs 40,000 with an annual operating and maintenance (O&M) cost of Rs. 30,000 and a salvage value of Rs. 5,000 after its 5-year. If MARR is assumed to be 15 %, the present worth of cost will be ___________.
(a) 40000
(b) 70000
(c) 138075
(d) 190370
Answer:

Option (c)

12.
A machine has initial cost of Rs. 16000 and useful life of 4 years. If the salvage value of the machine after 2 years is 4000 and after 4 years is 2000, find present worth of cost of the machine for desired service life of 6 years with identical replacement after 4 years. Assume MARR of 10%.
(a) 21304
(b) 23304
(c) 25304
(d) Insufficient data
Answer:

Option (b)

13.
A machine has initial cost of Rs. 16000 and useful life of 4 years. If the end of life salvage value of the machine is Rs. 2000, find present worth of cost of the machine for desired service life of 6 years with identical replacement after 4 years. Assume MARR of 10%.
(a) 21304
(b) 23304
(c) 25304
(d) Insufficient data
Answer:

Option (d)

14.
The present worth of a constant annual cost over an analysis period that extends to infinite is called ____________.
(a) Capitalized cost
(b) Net cost
(c) First cost
(d) None of the above
Answer:

Option (a)

15.
Determine the capitalized cost at 15% interest of a structure with an initial cost of Rs. 200000 and annual operating and maintenance costs of Rs. 40000.
(a) 240000
(b) 420000
(c) 466667
(d) 646658
Answer:

Option (c)

16.
What is the Present Worth at 5% interest of a series of Rs. 20,000 payments every 25 years (forever)? The first payment occurs 25 years from now.
(a) 400000
(b) 16000
(c) 8400
(d) 28400
Answer:

Option (c)

17.
How much should one set aside as capital cost to pay Rs 5000 per year for maintenance on a machine if interest is assumed to be 4%? For perpetual maintenance (), the principal sum must remain undiminished after the annual disbursement is made.
(a) 100000
(b) 125000
(c) 200000
(d) 225000
Answer:

Option (b)

18.
A city plans a pipeline to transport water from a distant watershed area to the city. The pipeline will cost Rs. 8000000 and will have an expected life of 70 years. The city expects to keep the water line in service indefinitely. Compute the capitalized cost, assuming 7% interest.
(a) 8071000
(b) 9071000
(c) 8710000
(d) 9710000
Answer:

Option (a)

19.
Assuming annual interest of i%, If initial present sum is P and required end-of-period withdrawal is of A forever without diminishing initial sum P, then P and A are related as ..
(a) P = Ai
(b) A = Pi
(c) P = A(i+1)
(d) A = P (i+1)
Answer:

Option (b)

20.
Which of the following is used for selecting the best alternative from among a set of mutually exclusive alternatives in economic analysis ?
(a) Present worth analysis
(b) Annual cash flow
(c) Rate of return
(d) All of the above
Answer:

Option (d)

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