Practice Test: Question Set - 04
1. Pick up the main purpose of project cost control from the following:
- (A) To signal immediate warning of uneconomic operations
- (B) To provide a feed back to the estimator
- (C) To promote cost consciousness
- (D) All of these
2. Pick up the correct statement from the following:
- (A) A NPV profile graph shows the curvilinear relationship between the net present value of the project and discount rate employed
- (B) In a NPV profile, if discount rate is zero, then net present value is simply total cash inflows less the total cash outflows of the project
- (C) As the discount rate increases, the net present value profile slopes downward to the right
- (D) All of these
3. 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 - (n - 1) b
4. Which one of the following is included in financial ratios of the firm?
- (A) Profitability ratio
- (B) Liquidity ratio
- (C) Turnover ratio
- (D) All of these
5. Pick up the correct statement from the following:
- (A) The ability of a company to meet obligations which are likely to mature in short term, is called liquidity
- (B) The liquidity ratio may be defined as a relationship of current liabilities and current assets and advances
- (C) The liquidity ratios are used to indicate the financial position of the firm
- (D) All of these
6. Pick up the correct statement from the following:
- (A) The receipts and disbursements in a given time interval are referred to as cash flow
- (B) The assumptions that all cash flows occur at the end of the interest period, is known as the end of period convention
- (C) The cash flow diagram represents the statement of the problem and also includes what is given and what is to be found
- (D) All of the above
7. Pick up the correct statement from the following:
- (A) Engineering economy is a collection of mathematical techniques which simplify economic comparisons
- (B) Engineering economy is a decision assistance tool by which one method will be chosen as the most economically one
- (C) For understanding the engineering economy, one should be able to classify the basic terminology and fundamental concepts of economy
- (D) All of these
8. In the cash flow diagram shown in the given figure
- (A) The first disbursement occurs at the end of year 2
- (B) The second disbursement occurs at the end of year 4
- (C) The first receipt occurs at the end of year 1
- (D) All of these
9. Which one of the following statements is correct?
- (A) The number of years required to recover the initial cash investment in a project, is called Pay Back period (PBP)
- (B) The discount rate that equates the present value of the expected Net Cash Flows (CFs) with the Initial Cash Outflow (ICO) is known as internal rate of return
- (C) The present value of the proposal's net cash flows, less the proposal's initial cash outflow is known as the Net Present Value (NPV)
- (D) All of these
10. The wages of supervisors and material handlers are charged as:
- (A) Over head
- (B) Direct labour cost
- (C) Indirect labour cost
- (D) None of these