102 + Mcqs in Chemical Engineering Plant Economics Page 1 McqOptions

1.	A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as%!
A.	Perpetuity
B.	Capital charge factor
C.	Annuity
D.	Future worth
Answer» D. Future worth

Discussion

2.	A reactor having a salvage value of Rs. 10000 is estimated to have a service life of 10 years. The annual interest rate is 10%. The original cost of the reactor was Rs. 80000. The book value of the reactor after 5 years using sinking fund depreciation method will be Rs.%!
A.	40096
B.	43196
C.	53196
D.	60196
Answer» E.

Discussion

3.	An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be%!
A.	1000 (1 + 0.1/4)20
B.	1000 (1 + 0.1)20
C.	1000 (1 + 0.1/4)5
D.	1000 (1 + 0.1/2)5
Answer» B. 1000 (1 + 0.1)20

Discussion

4.	Equipment installation cost in a chemical process plant ranges from __________ percent of the purchased equipment cost.%!
A.	10 to 20
B.	35 to 45
C.	55 to 65
D.	70 to 80
Answer» C. 55 to 65

Discussion

5.	Nominal and effective interest rates are equal, when the interest is compounded%!
A.	Quarterly
B.	Semi-annually
C.	Annually
D.	In no case, they are equal
Answer» D. In no case, they are equal

Discussion

6.	In an ordinary chemical plant, electrical installation cost may be about%!
A.	10-15% of purchased equipment cost
B.	3-10% of fixed capital investment
C.	Either A or B
D.	Neither A nor B
Answer» D. Neither A nor B

Discussion

7.	Profit is equal to revenue minus%!
A.	Book value
B.	Total cost
C.	Operating cost
D.	None of these
Answer» C. Operating cost

Discussion

8.	Which of the following is a component of working capital investment?%!
A.	Utilities plants
B.	Maintenance and repair inventory
C.	Process equipments
D.	Depreciation
Answer» C. Process equipments

Discussion

9.	Factory manufacturing cost is the sum of the direct production cost%!
A.	Fixed charges and plant overhead cost
B.	And plant overhead cost
C.	Plant overhead cost and administrative expenses
D.	None of these
Answer» B. And plant overhead cost

Discussion

10.	The value of a property decreases __________ with time in straight line method of determining depreciation.%!
A.	Linearly
B.	Non-linearily
C.	Exponentially
D.	Logarithmically
Answer» B. Non-linearily

Discussion

11.	The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of __________ percent.%!
A.	0.1 to 1
B.	1 to 2
C.	10 to 20
D.	50 to 60
Answer» D. 50 to 60

Discussion

12.	In a manufacturing industry, break even point occurs, when the%!
A.	Total annual rate of production equals the assigned value
B.	Total annual product cost equals the total annual sales
C.	Annual profit equals the expected value
D.	Annual sales equals the fixed cost
Answer» C. Annual profit equals the expected value

Discussion

13.	For a typical project, the cumulative cash flow is zero at the%!
A.	End of the project life
B.	Break even point
C.	Start up
D.	End of the design stage
Answer» C. Start up

Discussion

14.	*$_Which of the following is a component of working capital investment??
A.	Utilities plants
B.	Maintenance and repair inventory
C.	Process equipments
D.	Depreciation
Answer» C. Process equipments

Discussion

15.	*$_Profit is equal to revenue minus?
A.	Book value
B.	Total cost
C.	Operating cost
D.	None of these
Answer» C. Operating cost

Discussion

16.	*$_Nominal and effective interest rates are equal, when the interest is compounded?
A.	Quarterly
B.	Semi-annually
C.	Annually
D.	In no case, they are equal
Answer» D. In no case, they are equal

Discussion

17.	*$_In an ordinary chemical plant, electrical installation cost may be about?
A.	10-15% of purchased equipment cost
B.	3-10% of fixed capital investment
C.	Either A or B
D.	Neither A nor B
Answer» D. Neither A nor B

Discussion

18.	*$_If an amount R is paid at the end of every year for 'n' years, then the net present value of the annuity at an interest rate of i is?
A.	R[((1 + i)n - 1)/i]
B.	[((1 + i)n - 1)/i(1 + i)n]
C.	R(1 + i)n
D.	R/(1 + i)n
Answer» C. R(1 + i)n

Discussion

19.	*$_The 'total capital investment' for a chemical process plant comprises of the fixed capital investment and the?
A.	Overhead cost
B.	Working capital
C.	Indirect production cost
D.	Direct production cost
Answer» C. Indirect production cost

Discussion

20.	*$_The payback method for the measurement of return on investment?
A.	Gives a correct picture of profitability
B.	Underemphasises liquidity
C.	Does not measure the discounted rate of return
D.	Takes into account the cash inflows after the recovery of investments
Answer» D. Takes into account the cash inflows after the recovery of investments

Discussion

21.	*$_Gantt chart (or Bar chart) is helpful in?
A.	Efficient utilisation of manpower and machines
B.	Preparing production schedule
C.	Efficient despatching of products
D.	Inventory control
Answer» C. Efficient despatching of products

Discussion

22.	*$___________ of depreciation calculation accounts for the interest on investement.?
A.	Straight line method
B.	Declining balance
C.	Both A and B
D.	Neither A nor B
Answer» E.

Discussion

23.	/_A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as?
A.	Perpetuity
B.	Capital charge factor
C.	Annuity
D.	Future worth
Answer» D. Future worth

Discussion

24.	/_Effluent treatment cost in a chemical plant is categorised as the __________ cost.?
A.	Fixed
B.	Overhead
C.	Utilities
D.	Capital
Answer» D. Capital

Discussion

25.	/_The value of a property decreases __________ with time in straight line method of determining depreciation.?
A.	Linearly
B.	Non-linearily
C.	Exponentially
D.	Logarithmically
Answer» B. Non-linearily

Discussion

26.	/_For a typical project, the cumulative cash flow is zero at the?
A.	End of the project life
B.	Break even point
C.	Start up
D.	End of the design stage
Answer» C. Start up

Discussion

27.	/_In a manufacturing industry, break even point occurs, when the?
A.	Total annual rate of production equals the assigned value
B.	Total annual product cost equals the total annual sales
C.	Annual profit equals the expected value
D.	Annual sales equals the fixed cost
Answer» C. Annual profit equals the expected value

Discussion

28.	/_Equipment installation cost in a chemical process plant ranges from __________ percent of the purchased equipment cost.?
A.	10 to 20
B.	35 to 45
C.	55 to 65
D.	70 to 80
Answer» C. 55 to 65

Discussion

29.	/_An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be?
A.	1000 (1 + 0.1/4)20
B.	1000 (1 + 0.1)20
C.	1000 (1 + 0.1/4)5
D.	1000 (1 + 0.1/2)5
Answer» B. 1000 (1 + 0.1)20

Discussion

30.	/_Factory manufacturing cost is the sum of the direct production cost?
A.	Fixed charges and plant overhead cost
B.	And plant overhead cost
C.	Plant overhead cost and administrative expenses
D.	None of these
Answer» B. And plant overhead cost

Discussion

31.	/_A reactor having a salvage value of Rs. 10000 is estimated to have a service life of 10 years. The annual interest rate is 10%. The original cost of the reactor was Rs. 80000. The book value of the reactor after 5 years using sinking fund depreciation method will be Rs.?
A.	40096
B.	43196
C.	53196
D.	60196
Answer» E.

Discussion

32.	/_The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of __________ percent.?
A.	0.1 to 1
B.	1 to 2
C.	10 to 20
D.	50 to 60
Answer» D. 50 to 60

Discussion

33.	/_A present sum of Rs. 100 at the end of one year, with half yearly rate of interest at 10%, will be Rs.?
A.	121
B.	110
C.	97
D.	91
Answer» B. 110

Discussion

34.	/_'P' is the investment made on an equipment, 'S' is its salvage value and 'n is the life of the equipment in years. The depreciation for rath year by the sum-of years digit method will be?
A.	(P - S)/n
B.	1 - (P/S)1/m
C.	M/n x (P - S)
D.	2(n - m + 1)/n(n + 1) x (P - S)
Answer» E.

Discussion

35.	/_A balance sheet for a chemical plant shows its financial condition at any given date. It does not contain the __________ of the plant.?
A.	Current asset
B.	Current liability
C.	Long term debt
D.	Profit
Answer» E.

Discussion

36.	/_'Lang factor' is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of 'Lang factor' for fixed capital investment, for a solid-fluid processing chemical plant ranges from?
A.	1.2 to 1.4
B.	2.5 to 2.7
C.	4.2 to 4.4
D.	6.2 to 6.4
Answer» D. 6.2 to 6.4

Discussion

37.	/_In which of the electric power generation system, the operating cost is minimum??
A.	Thermal
B.	Nuclear
C.	Hydroelectric
D.	Fast breeder reactor
Answer» D. Fast breeder reactor

Discussion

38.	/_Generally, income taxes are based on the?
A.	Total income
B.	Gross earning
C.	Total product cost
D.	Fixed cost
Answer» C. Total product cost

Discussion

39.	%_Pick out the wrong statement._%
A.	The annual depreciation rate for machinery and equipments in a chemical process plant is about 10% of the fixed capital investment
B.	Annual depreciation rate of buildings in a chemical plant is about 3% of its initial cost
C.	Insurance rates on annual basis in a chemical plant may be about 1% of the fixed capital investment
D.	In a chemical industry, research and development cost amounts to about 15% of net sales realisation (NSR)
Answer» E.

Discussion

40.	%_Payback period_%
A.	And economic life of a project are the same
B.	Is the length of time over which the earnings on a project equals the investment
C.	Is affected by the variation in earnings after the recovery of the investment
D.	All of the above
Answer» C. Is affected by the variation in earnings after the recovery of the investment

Discussion

41.	_ A present sum of Rs. 100 at the end of one year, with half yearly rate of interest at 10%, will be Rs.$?
A.	121
B.	110
C.	97
D.	91
Answer» B. 110

Discussion

42.	_ A balance sheet for a chemical plant shows its financial condition at any given date. It does not contain the __________ of the plant.$?
A.	Current asset
B.	Current liability
C.	Long term debt
D.	Profit
Answer» E.

Discussion

43.	_ 'P' is the investment made on an equipment, 'S' is its salvage value and 'n is the life of the equipment in years. The depreciation for rath year by the sum-of years digit method will be$?
A.	(P - S)/n
B.	1 - (P/S)1/m
C.	M/n x (P - S)
D.	2(n - m + 1)/n(n + 1) x (P - S)
Answer» E.

Discussion

44.	_ In which of the electric power generation system, the operating cost is minimum?$?
A.	Thermal
B.	Nuclear
C.	Hydroelectric
D.	Fast breeder reactor
Answer» D. Fast breeder reactor

Discussion

45.	_ 'Lang factor' is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of 'Lang factor' for fixed capital investment, for a solid-fluid processing chemical plant ranges from$?
A.	1.2 to 1.4
B.	2.5 to 2.7
C.	4.2 to 4.4
D.	6.2 to 6.4
Answer» D. 6.2 to 6.4

Discussion

46.	_ Which of the following elements is not included in the scope of market analysis?$?
A.	Competition from other manufactures
B.	Product distribution
C.	Opportunities
D.	Economics
Answer» E.

Discussion

47.	_ An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the$?
A.	Manufacturing cost
B.	Depreciation by sinking fund method
C.	Discrete compound interest
D.	Cash ratio
Answer» C. Discrete compound interest

Discussion

48.	_ The __________ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities.$?
A.	Cash ratio
B.	Net working capital
C.	Current ratio
D.	Liquids assets
Answer» C. Current ratio

Discussion

49.	_ Payback period$?
A.	And economic life of a project are the same
B.	Is the length of time over which the earnings on a project equals the investment
C.	Is affected by the variation in earnings after the recovery of the investment
D.	All of the above
Answer» C. Is affected by the variation in earnings after the recovery of the investment

Discussion

50.	_ __________ method for profitability evaluation of a project does not account for investment cost due to land.$?
A.	Net present worth
B.	Pay out period
C.	Discounted cash flow
D.	Rate of return on investment
Answer» C. Discounted cash flow

Discussion

Explore topic-wise MCQs in Chemical Engineering.

A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as%!

A reactor having a salvage value of Rs. 10000 is estimated to have a service life of 10 years. The annual interest rate is 10%. The original cost of the reactor was Rs. 80000. The book value of the reactor after 5 years using sinking fund depreciation method will be Rs.%!

An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be%!

Equipment installation cost in a chemical process plant ranges from __________ percent of the purchased equipment cost.%!

Nominal and effective interest rates are equal, when the interest is compounded%!

In an ordinary chemical plant, electrical installation cost may be about%!

Profit is equal to revenue minus%!

Which of the following is a component of working capital investment?%!

Factory manufacturing cost is the sum of the direct production cost%!

The value of a property decreases __________ with time in straight line method of determining depreciation.%!

The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of __________ percent.%!

In a manufacturing industry, break even point occurs, when the%!

For a typical project, the cumulative cash flow is zero at the%!

*$_Which of the following is a component of working capital investment??

*$_Profit is equal to revenue minus?

*$_Nominal and effective interest rates are equal, when the interest is compounded?

*$_In an ordinary chemical plant, electrical installation cost may be about?

*$_If an amount R is paid at the end of every year for 'n' years, then the net present value of the annuity at an interest rate of i is?

*$_The 'total capital investment' for a chemical process plant comprises of the fixed capital investment and the?

*$_The payback method for the measurement of return on investment?

*$_Gantt chart (or Bar chart) is helpful in?

*$___________ of depreciation calculation accounts for the interest on investement.?

*/*_A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as?

*/*_Effluent treatment cost in a chemical plant is categorised as the __________ cost.?

*/*_The value of a property decreases __________ with time in straight line method of determining depreciation.?

*/*_For a typical project, the cumulative cash flow is zero at the?

*/*_In a manufacturing industry, break even point occurs, when the?

*/*_Equipment installation cost in a chemical process plant ranges from __________ percent of the purchased equipment cost.?

*/*_An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be?

*/*_Factory manufacturing cost is the sum of the direct production cost?

*/*_A reactor having a salvage value of Rs. 10000 is estimated to have a service life of 10 years. The annual interest rate is 10%. The original cost of the reactor was Rs. 80000. The book value of the reactor after 5 years using sinking fund depreciation method will be Rs.?

*/*_The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of __________ percent.?

*/*_A present sum of Rs. 100 at the end of one year, with half yearly rate of interest at 10%, will be Rs.?

*/*_'P' is the investment made on an equipment, 'S' is its salvage value and 'n is the life of the equipment in years. The depreciation for rath year by the sum-of years digit method will be?

*/*_A balance sheet for a chemical plant shows its financial condition at any given date. It does not contain the __________ of the plant.?

*/*_'Lang factor' is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of 'Lang factor' for fixed capital investment, for a solid-fluid processing chemical plant ranges from?

*/*_In which of the electric power generation system, the operating cost is minimum??

*/*_Generally, income taxes are based on the?

%_Pick out the wrong statement._%

%_Payback period_%

_ A present sum of Rs. 100 at the end of one year, with half yearly rate of interest at 10%, will be Rs.$?

_ A balance sheet for a chemical plant shows its financial condition at any given date. It does not contain the __________ of the plant.$?

_ 'P' is the investment made on an equipment, 'S' is its salvage value and 'n is the life of the equipment in years. The depreciation for rath year by the sum-of years digit method will be$?

_ In which of the electric power generation system, the operating cost is minimum?$?

_ 'Lang factor' is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of 'Lang factor' for fixed capital investment, for a solid-fluid processing chemical plant ranges from$?

_ Which of the following elements is not included in the scope of market analysis?$?

_ The __________ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities.$?

_ Payback period$?

_ __________ method for profitability evaluation of a project does not account for investment cost due to land.$?

/_A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as?

/_Effluent treatment cost in a chemical plant is categorised as the __________ cost.?

/_The value of a property decreases __________ with time in straight line method of determining depreciation.?

/_For a typical project, the cumulative cash flow is zero at the?

/_In a manufacturing industry, break even point occurs, when the?

/_Equipment installation cost in a chemical process plant ranges from __________ percent of the purchased equipment cost.?

/_An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be?

/_Factory manufacturing cost is the sum of the direct production cost?

/_A reactor having a salvage value of Rs. 10000 is estimated to have a service life of 10 years. The annual interest rate is 10%. The original cost of the reactor was Rs. 80000. The book value of the reactor after 5 years using sinking fund depreciation method will be Rs.?

/_The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of __________ percent.?

/_A present sum of Rs. 100 at the end of one year, with half yearly rate of interest at 10%, will be Rs.?

/_'P' is the investment made on an equipment, 'S' is its salvage value and 'n is the life of the equipment in years. The depreciation for rath year by the sum-of years digit method will be?

/_A balance sheet for a chemical plant shows its financial condition at any given date. It does not contain the __________ of the plant.?

/_'Lang factor' is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of 'Lang factor' for fixed capital investment, for a solid-fluid processing chemical plant ranges from?

/_In which of the electric power generation system, the operating cost is minimum??

/_Generally, income taxes are based on the?