Scribd
Upload
1K views4 pages

Quiz 2

This document appears to be a quiz for an engineering economics course. It contains 8 multiple choice questions related to topics like return on equity, market equilibrium, cost functions, depreciation, and financial ratios. The questions reference information provided about demand and supply functions, production costs, asset values, and the financial statements of a company.

Uploaded by

zainabcom
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
1K views4 pages

Quiz 2

This document appears to be a quiz for an engineering economics course. It contains 8 multiple choice questions related to topics like return on equity, market equilibrium, cost functions, depreciation, and financial ratios. The questions reference information provided about demand and supply functions, production costs, asset values, and the financial statements of a company.

Uploaded by

zainabcom
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

VERSION 1

FAMILY NAME / INITIAL STUDENT ID #

S O L U T I

O N S

MIME 310 ENGINEERING ECONOMY QUIZ #2


May 8, 2008 8:30 to 9:15

Short Problems Circle the correct answer on this paper and record it on the computer answer sheet. All questions are worth 1.25 points each for a total of 10. Note: There are no penalties for incorrect answers.
1. A firm with sales of $1 million, a net after-tax income of $30 000, total assets of $1.5 million, total liabilities of $750 000 and no preferred equity has a return on equity of: A) 20 % B) 15 % Shareholders equity: 1 500 000 - 750 000 = 750 000 C) 4 % ROE: 30 000 / 750 000 = 0.04 or 4 % D) 3 % E) None of the choices listed above

Use the following information to answer questions 2 and 3.


The demand and supply functions for a particular product are: QD = 189 - 2.25 P QS = 124 + 1.5 P 2. The market equilibrium price and quantity are, respectively: A) $84.00 and 65 At market equilibrium, B) $82.67 and 150 189 - 2.25 P = 124 + 1.5 P C) $17.33 and 150 0.75 P = 65 D) $150.00 and 313 P=17.33 E) None of the choices listed above Q: 124 + 1.5 (17.33) = 150 At market equilibrium, the price elasticity of supply is: A) -2.25 B) 0.17 For supply, dQ/dP: 1.5 C) 0.26 ES: 1.5 / (150 / 17.33) = 0.17 D) 1.50 E) None of the choices listed above

3.

VERSION 1

4.

The total production cost function of a plant consists of the following: Fixed cost: $120 000 per year Constant variable cost: $50 per unit as long as the annual production does not exceed 5000 units $30 per unit for that part of production that exceeds 5000 units per year The marginal cost at a production rate of 7000 units per year is: A) $30 B) $50 The marginal cost is the slope of the cost function at a rate of 7000 units per year. C) $80 D) 7000 MC=30 E) None of the choices listed above

5.

An asset costs $60 000 and has a salvage value of $10 000 at the end of its 5-year life. Determine the assets accounting book value after two years of use using the sum-of-theyears-digits depreciation method. The corporate income tax rate is 34 %. A) $20 000 SOYD: 1 + 2 + 3 + 4 + 5 = 15 B) $16 000 DC1: (60 000 - 10 000) (5 / 15) = 16 667 C) $16 667 DC2: (60 000 - 10 000 (4 / 15) = 13 333 D) $40 000 BV2: 60 000 - 16 667 - 13 333 = 30 000 E) $30 000

VERSION 1

Use the following information to answer questions 6 to 8.


Cole Eagan Enterprise Inc. BALANCE SHEET December 31, 2002
Current Assets Cash Accounts receivable Inventories Total current assets Fixed Assets at Cost Less accumulated depreciation Net Fixed Assets 4 500 Current Liabilities Accounts payable Notes payable Accrued expenses Total current liabilities Long-term Debt Shareholders Equity Common Shares Retained Earnings Total Shareholders Equity Total Liab. & Shar. Equity 30 764 10 000 1 000

15 000

Total Assets

Information for 2002


Net sales (all credit sales) Gross profit margin* Inventory turnover ratio (360 days per year) Average collection period Current ratio Total asset turnover ratio Debt ratio
* (Net Sales - Cost of Goods Sold) / Net Sales

$110 000 0.25 3.0 65 days 2.4 1.13 0.538

6.

Accounts receivable for CEE Inc, in 2002 were: A) $14 056 B) $14 895 ACP: Accounts receivable (360) / Sales = 65 Receivables: 65 (110 000) / 360 = 19 861 C) $19 861 D) $18 333 Inventories for CEE Inc. in 2002 were: A) $9167 B) $36 667 C) $32 448 D) $27 500 Total assets for CEE Inc. in 2002 were: A) $45 895 B) $124 300 C) $97 345 D) $58 603

7.

Cost of goods sold: 110 000 (1 - 0.25) = 82 500 ITR: Cost of goods sold / Inventory = 3 Inventory: 82 500 / 3 = 27 500

8.

ATR: Sales / Total assets = 1.13 Total assets: 110 000 / 1.13 = 97 345

THIS IS THE LAST PAGE OF THE QUIZ PAPER


3

VERSION 1

Answer Key for Version 2


1. 2. 3. 4. 5. 6. 7. 8. B B D C B D B B

You might also like