Information Systems And Engineering Economics Set 6

This set of Information systems and engineering economics Multiple Choice Questions & Answers (MCQs) focuses on Information Systems And Engineering Economics Set 6

Q1 | Interest is the cost of moneyas a cost to the borrower and an earningto the lender
• TRUE
• FALSE
Q2 | Cash Flow is the movement of money (in or out) of a project
• TRUE
• FALSE
Q3 | the practice of charging an interest rate to an initial sum and to anypreviously accumulated interest that has not been withdrawn.
• compound interest
• simple interest
Q4 | Given P = $1,000 , i = 8% and N = 3 years calculate future value usingCompound interest • 1200 • 1259.71 Q5 | Calculate future value on the principal amount of Rs. 2000 at theinterest rate of 6% for the period of 5 years using simple interest • 1200 • 1259.71 • 2600 • none Q6 | Economic equivalence refers to the fact that a cash ?ow-whether asingle payment or a series of payments-can be converted to an equivalent cash ?ow at any point in time. • TRUE • FALSE Q7 | If you deposit P dollars today for N periods at i, you will have F dollarsat the end of period N. • TRUE • FALSE Q8 | You want to set aside a lump sum amount today in a savings account that earns 7% annual interest to meet a future expense in the amount of$10,000 to be incurred in 6 years. How much do you need to deposittoday?
• 5000
• 6663
• 8000
Q9 | A fund accumulated by periodic deposits and reserved exclusively fora speci?c purpose, such as retirement of a debt
• sinking fund
• principal
• interest
Q10 | A fund created by making periodic deposits (usually equal) at compound interest in order to accumulate a given sum at a givenfuture time for some speci?c purpose is sinking fund
• TRUE
• FALSE
Q11 | the practice of charging an interest rate only to an initial sum (principal amount) is
• compound interest
• simple interest
Q12 | Suppose that you invest $1 for 1 year at 18% compounded monthly.How much interest would you earn? • 19.56 % compounded annu • 18.56 % compounded a • 20.56 % compounded annually Q13 | Effective Interest Rate is Actual interest earned or paid in a year or some other time period • TRUE • FALSE Q14 | Suppose that you invest$1 for 1 year at 18% compounded monthly.How much interest would you earn?
• 19.56 % compounded annu
• 18% compounded mon
• 1.5% per month for 12
• all true
Q15 | Nominal Interest Rate is Interest rate quoted based on an annual period
• TRUE
• FALSE
Q16 | The annual equivalent worth (AE) criterion provides a basis formeasuring investment worth by determining equal payments on an annual basis.
• TRUE
• FALSE
Q17 | When only costs are involved, the AE method is sometimes called theannual equivalent cost method.
• TRUE
• FALSE
Q18 | In AE analysis revenues must cover two kinds of costs:– Operatingcosts and Capital recovery costs
• TRUE
• FALSE
Q19 | Operating costs are incurred by the operation of physical plants orequipment needed to provide service
• TRUE
• FALSE
Q20 | Capital recovery costs are incurred by purchasing assets to be used in production and service.
• TRUE
• FALSE
Q21 | Consider a machine that costs $20,000 and has a ?ve-year useful life.At the end of the ?ve years, it can be sold for$4,000 after all tax adjustments have been factored in. If the ?rm could earn an after-tax revenue of \$4,400 per year with this machine, should it be purchased at an interest rate of 10%? (All bene?ts and costs associated with themachine are accounted for in these ?gures.)
• -220.76
• -200
• -240
Q22 | In?ation is a loss in the purchasing power of money over time.
• TRUE
• FALSE
Q23 |                       is a loss in the purchasing power of money over time.
• in?ation
• de?ation
Q24 | The same dollar amount buys less of an item over time is
• in?ation
• de?ation
Q25 | Consumer Price Index (CPI) Measures prices of typical purchases madeby consumers, based on a typical market basket of goods and services required by average consumers
• TRUE
• FALSE