### Information Systems And Engineering Economics Set 8

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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 8

Q1 | 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 new manufacturing 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 (n? =? 0). What would be a starting negotiating price for the project from Merck? Assume thatGene’s MARR ? = 20%.

- $524 million
- $105 million
- $420 million
- $494 million

Q2 | A manufacturing company is considering the purchase of a new CNC lathe, which will cost $60,000 and has an annual maintenance cost of$8,000. A few parts in the lathe need to be replaced once every 5 years to enable smooth running of the lathe. This would cost an additional$20,000 (once every 5 years). Assuming that the lathe would last 15 years under these conditions, what is the total equivalent cost (present value) of this investment at an interest rate of 12%? (Assume thatthere will be no appreciable salvage value at the end of 15 years.)

- 135928
- 132275
- 114487
- 72275

Q3 | 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 theirservice lives
- project e2

Q4 | Consider a project with a ?rst cost (investment) of $250,000, an annual O&M cost of $50,000, annual revenue of $160,000, and a salvage value of $40,000 after a 10-year life. Find the annual worth of the project assuming an interest of 13% per year.

- 35867
- 81000
- 82445
- 66099

Q5 | Find the annual equivalent worth for the following in?nite cash ?ow series at an interest rate of 10%:

- 461.2
- 445.2
- 985.4
- 438.6

Q6 | Your ?rm has purchased an injection molding machine at a cost of$100,000. The machine’s useful life is estimated at 8 years. Your accounting department has estimated the capital cost for this machine at about $25,455 per year. If your ?rm’s MARR is 20%, how much salvage value do you think the accounting department assumed at the end of 8 years?

- 12000
- 9000
- 10000
- 11000

Q7 | 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’sinterest rate is 15%, what would be the machine cost per hour?

- 8.79
- 7.85
- 11.85
- 5.89

Q8 | The following in?nite cash ?ow series has a rate of return of 10%. Determine the unknown value of X.

- 120
- 100
- 82
- 90

Q9 | 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 ofyear 2?

- 82000
- 90000
- 64000
- 60000

Q10 | 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

- 0.1
- 0.15
- 0.2
- 0.3

Q11 | For an employee in receipt of hostel expenditure allowance for his three children,the maximum annual allowance exempt under section 10(14) is

- a) rs.10, 800
- b) rs.7,200
- c) rs.9,600
- d) rs.3,600

Q12 | 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

Q13 | A.O.P should consist of :

- a) individual only
- b) persons other thanindividual only
- c) both the above
- d) none of the above

Q14 | Body of individual should consist of :

- a) individual only
- b) persons other thanindividual only
- c) both the above
- d) none of the above

Q15 | A new business was set up on15-11-2008 and it commenced its business from 1-12-2008.The ?rst previous year in this case shall be:

- a) 15-11-2008 to31-3-2009
- b) 1-12-2008 to31-3-2009
- c) 2008-2009
- d) none of the above

Q16 | A person leaves India permanently on15-11-2008.The assessment year for income earned till 15-11-2008 in this case shall be:

- a) 2007-08
- b) 2008-09
- c) 2009-10
- d) none of the above

Q17 | As per section 30, which expenditure incurred for a building used for the business or profession shallnot be allowed as deduction?

- a. rent, rates and taxes
- b. insurance of building
- c. repairs of building
- d. capital expenditure

Q18 | Group of assets falling within a class of assets comprising of tangible & intangible assets isknown as :

- a. group of assets
- b. block of assets
- c. set of assets
- d. none of these

Q19 | Depreciation available, if asset is used for less than 180 days during the year of acquisitionshall be of block rate:

- a. 50%
- b. 20%
- c. 100%
- d)15%

Q20 | 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 beprovided under section 32?

- a. 7.5%
- b. 15%
- c. 20
- d. 10%

Q21 | If the Computer is purchased on 11th May, 2018 thenat what rate depreciation will be provided on it?

- a. 60%
- b.40%
- c.30%
- d.20%

Q22 | 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 | The transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individualassets and liabilities in the sale is known as :

- a. lump sum sale
- b. slump sale
- c. aggregate sale
- d. total sale

Q24 | What is the rate of depreciation charged oncomputer software?

- a. 40%
- b. 15%
- c. 60%
- d. 100%

Q25 | Rate of depreciation chargeable onfully temporary wooden structure for the assessment year 2019-20 is:

- a. 5%
- b. 10%
- c. 100%
- d. 40%