Information Systems And Engineering Economics Set 24

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This set of Information systems and engineering economics Multiple Choice Questions & Answers (MCQs) focuses on Information Systems And Engineering Economics Set 24

Q1 | An investment project costs P. It is expected to have an annual net cash ?ow of 0.125P for 20 years. What is the project’s payback period?
  • 6 years
  • 0 year
  • 11 year
  • 8 year
Q2 | Find the net present worth of the following cash ?ow series at an interest rate of 10%
  • $550 < pw(10%) ? $600
  • $600 < pw(10%) ? $650
  • $500 < pw(10%) ? $550
  • $650 < pw(10%) ? $700
Q3 | You are considering buying an old house that you will convert into an o?ce building for rental. Assuming that you will own the property for 10 years, how much would you be willing to pay for the old house now given the following ?nancial data?
  • 250100
  • 232316
  • 201205
  • 218420
Q4 | Your R&D group has developed and tested a computer software package that assists engineers to control the proper chemical mix for the various process manufacturing industries. If you decide to market the software, your ?rst year operating net cash ?ow is estimated to be$1,000,000. Because of market competition, product life will be about 4 years, and the product’s market share will decrease by 25% each year over the previous year’s share. You are approached by a big software house which wants to purchase the right to manufacture and distribute the product. Assuming that your interest rate is 15%, for what minimum price would you be willing to sell the software?
  • 2887776
  • 2766344
  • 2047734
  • 2507621
Q5 | Find the capitalized equivalent worth for the project cash ?ow series at an interest rate of 10%.
  • ce(10%) ? = ? $1,753
  • ce(10%) ? = ? $1,548
  • ce(10%) ? = ? $1,500
  • ce(10%) ? = ? $1,476
Q6 | The following table contains a summary of how a project’s balance is expected to change over its 5 year service life at 10% interest.:Which of the following statements is incorrect?
  • the net present worth of the project at 10% interest is $1,242
  • the required additional investment at the end of period 1 is $500
  • the net future of the project at 10% interest is $2,000
  • within 2 years, the company will recover all its investments and the cost of funds (interest) from the project
Q7 | Reconsider the project balance table calculated at 10% given in 5.9.:Which of the following statements is correct?
  • the cash ?ow in period 3 is $240
  • the project is not pro?table at i ? = ?10%.
  • the conventional payback period is 1.7 years
  • the net present worth of the project is $2,000
Q8 | A newly constructed water treatment facility cost $2 million. It is estimated that the facility will need renovating every 30 years at a cost of $1 million. Annual repairs and maintenance are estimated to be$100,000 per year. At an interest rate of 6%, determine the capitalized cost of the facility.
  • 3579806
  • 3877482
  • 4301205
  • 3360343
Q9 | Consider the following two investment alternatives:Suppose that your ?rm needs either machine for only 2 years. The net proceeds from the sale of machine B are estimated to be $200. What should be the required net proceeds from the sale of machine A so that both machines could be considered economically indifferent at an interest rate of 10%?
  • 850
  • 700
  • 750
  • 800
Q10 | Gene Research, Inc. just ?nished a 4-year R&D and clinical trials successfully and expects a quick approval from the Food and DrugAdministration. If the company markets the product on their own, it requires $30 million immediately (n ? = ? 0) to build a newmanufacturing facility, and it is expected to have a 10 year product life. The R&D expenditure in the previous years and the anticipated revenues that the company can generate over the next 10 years is summarized as follows:Merck, a large drug company is interested in purchasing the R&D project and the right to commercialize the product from Gene Research, Inc., immediately (nD =D 0). What would be astarting negotiating price for the project from Merck? Assume that Gene’s MARR ? = 20%.
  • $524 million
  • $105 million
  • $420 million
  • $494 million
Q11 | A manufacturing company is considering two mutually exclusive machines E1 and E2 with the following cash ?ow information:Which machine would you recommend if the company needs either machine for only 3 years? Assume a MARR of 12%
  • project e1
  • indifferent
  • cannot compare without knowing the year-end salvage values over their service lives
  • project e2
Q12 | You just purchased a pin inserting machine to relieve some bottleneck problems that have been created in manufacturing a PC board. The machine cost $56,000 and has an estimated service life of 5 years. At that time, the estimated salvage value would be $5,000. The machine is expected to operate 2,500 hours per year. The expected annual operating and maintenance cost would be $6,000. If your ?rm’s interest rate is 15%, what would be the machine cost per hour?
  • 8.79
  • 7.85
  • 11.85
  • 5.89
Q13 | An asset with a ?rst cost of $100,000 is depreciated over 5-year period. It is expected to have a $10,000 salvage value at the end of 5 years.Using the straight-line method, what is the book value at the end of year 2?
  • 82000
  • 90000
  • 64000
  • 60000
Q14 | The rate of tax that is leivable on STCG arising from transfer of Equity shares of aCompany or units of an Equity oriented fund is
  • 10%
  • 15%
  • 20%
  • 30%
Q15 | For an industrial undertaking ful?lling the conditions, additional depreciation in respectof a machinery costing Rs.10 lakh acquired and installed on October 3, 2005 is
  • a) rs.75,000
  • b) rs.1,50,000
  • c) rs.1,00,000
  • d) none of the above
Q16 | A.O.P should consist of :
  • a) individual only
  • b) persons other than individual only
  • c) both the above
  • d) none of the above
Q17 | Body of individual should consist of :
  • a) individual only
  • b) persons other than individual only
  • c) both the above
  • d) none of the above
Q18 | 24. As per section 30, which expenditure incurred for a building used for the business or profession shall not be allowed as deduction?
  • a. rent, rates and taxes
  • b. insurance of building
  • c. repairs of building
  • d. capital expenditure
Q19 | 25. Group of assets falling within a class of assets comprising of tangible & intangible assets is known as :
  • a. group of assets
  • b. block of assets
  • c. set of assets
  • d. none of these
Q20 | 28. If the Plant & Machinery is used for less than 180 days in the year of its acquisition, then,at what rate the depreciation on that asset should be provided under section 32?
  • a. 7.5%
  • b. 15%
  • c. 20
  • d. 10%
Q21 | If the Computer is purchased on 11th May, 2018 then at what rate depreciation will be provided on it?
  • a. 60%
  • b.40%
  • c.30%
  • d.20%
Q22 | 30. If the machinery is purchased on 4th October, 2018 then at what rate depreciation will be provided on it?
  • a. 60%
  • b. 7.5%
  • c. 15%
  • d. 10%
Q23 | 31. The transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in the sale is known as :
  • a. lump sum sale
  • b. slump sale
  • c. aggregate sale
  • d. total sale
Q24 | 32. What is the rate of depreciation charged on computer software?
  • a. 40%
  • b. 15%
  • c. 60%
  • d. 100%
Q25 | 33. Rate of depreciation chargeable onfully temporary wooden structure for the assessment year 2019-20 is
  • a. 5%
  • b. 10%
  • c. 100%
  • d. 40%