This document contains 10 multiple choice questions regarding engineering economy concepts like depreciation, break-even analysis, and capital budgeting. The questions provide financial and production information for various assets and companies, and ask the reader to calculate values like book value, depreciation expense, break-even sales volume, and determine the most economical capital proposal when given interest rates.
This document contains 10 multiple choice questions regarding engineering economy concepts like depreciation, break-even analysis, and capital budgeting. The questions provide financial and production information for various assets and companies, and ask the reader to calculate values like book value, depreciation expense, break-even sales volume, and determine the most economical capital proposal when given interest rates.
This document contains 10 multiple choice questions regarding engineering economy concepts like depreciation, break-even analysis, and capital budgeting. The questions provide financial and production information for various assets and companies, and ask the reader to calculate values like book value, depreciation expense, break-even sales volume, and determine the most economical capital proposal when given interest rates.
This document contains 10 multiple choice questions regarding engineering economy concepts like depreciation, break-even analysis, and capital budgeting. The questions provide financial and production information for various assets and companies, and ask the reader to calculate values like book value, depreciation expense, break-even sales volume, and determine the most economical capital proposal when given interest rates.
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Engineering Economy Set 2
1. A 30 hp sand mill cost P360,000,
brokerage cost is P5,000, foundation and installation costs P25,000 and other incidental expenses amounted to P20,000. Salvage value of the mill is estimated to be P60,000 after 20 years. Find the appraisal or book value of the mill using straight line depreciation method after 10 years. a) P163,750 b) P235,000 c) P269,000 d) P145,333 2. A dump truck was bought for P30,000 six years ago. It will have a salvage value of P3,000 four years from now. It is sold now for P8,000. What is its sunk cost ( a cost that can be recovered due to certain reason) if the depreciation method used is sinking fund at 6%? a) P5,800 b) P7,712 c) P8,732 d) P4,908 3. A cement mixer costs P45,000 with an estimated life of 5 years. Its salvage value is P2,500. Find its yearly depreciation charge using sinking fund method at 8.5%. a) P8,500 b) P7,172.54 b) P8,000 c) P7,692.74 4. An asset is purchased for P9,000. Its estimated life is 10 years, after which it will be sold for P1,000. Find the book value at the end of third year if sum-ofthe-years digit method ( SYDM) depreciation is used.
a) P6,100 c) P4,500
b) P5,072 d) P4,800
5. A property is purchased at P 100,000
with a salvage value of 10% of the original cost after 8 years of service. If during the first 4 years of service it produces 100 units per year and 80 units each year for the remaining years. What will be the book value after 5 years of service using service output method? a) P30,000 b) P50,000 c) P40,000 d) P60,000 6. A certain type of equipment losses 10% of its value each year. The machine cost P2,000 originally. What is the total depreciation after four years? a) P200 b) P819 c) P542 d) P688 7. Steel drum manufacturers incur a yearly fixed operating cost of P200,000. Each drum manufactured costs P160 to produce and sells P200. What is the manufacturers break-even sales volume in drums per year? a) 1250 units b) 2500 units c) 5000 units d) 1000 units 8.
XYZ Corporation manufactures bookcases that it sells for 65 each. It cost XYZ P35,000 per year to operate its plant. This sum includes rent, depreciation charges on equipment,
Review Innovations and salary payments. If the cost to produce one bookcase is P50, how many cases must be sold each year for XYZ to avoid loss? a) 2334 cases b) 539 cases c) 750 cases d) 2233 cases 9. It is estimated that insulation of steam pipes in a factory will reduce the fuel bill by as much as 20%. The cost of the insulation is P90,000 installed and the annual cost of taxes and insurance is 5% of the initial cost. Without insulation, the annual fuel bill is P180,000. If the insulation is worthless after 6 years use, what would be the rate of return? i=12% a) 22.7% b) 12.6% c) 14.8% d) 20.0%
10. RI is planning to put up its own
building. The two proposals being considered are: Proposal A: Construction of the building now, to cost P4,000,000. Proposal B: Construction of a smaller building now, to cost P3,000,000 and at the end of 5 years an extension to be added to cost P2,000,000.
Engineering Economy Set 2
Which is more economical if the interest rate is 20% and depreciation to be neglected? By how much?
a) Proposal around b) Proposal around
A is more economical by P196,245. B is more economical by P196,245.
Review Innovations c) Proposal A and B are economically equal. d) all of these are correct.
Seven Figures in The History of Swedish Economic Thought Knut Wicksell, Eli Heckscher, Bertil Ohlin, Torsten Gårdlund, Sven Rydenfelt, Staffan Burenstam Linder and Jaime Behar by Mats Lundahl (Auth.)
