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Engineering :: Economics


21.  Select the wrong statement
A. Depreciation is the unavoidable los in the value of plant equipment and materials with lapse in time B. Depreciation is a cash expense
C. Depreciation does figure in the computation of the income tax liability on cash flows from an investment D. Annual depreciation costs are constant when the straight-line method is used

22.  In the straight-line method for determining depreciation it is assumed that the value of the property
A. decreases exponentially with time B. decreases logarithmically with time
C. decreases linearly with time D. remains constant with time

23.  A property has an initial value of Rs 10000 service life of 10 years and final salvage value of Rs. 2000. What is the annual depreciation cost if straight-line depreciation is used?
A. Rs. 1000 B. Rs. 1200
C. Rs. 2000 D. Rs. 800

24.  When the declining-balance method is used
A. the annual depreciation cost is a fixed percentage of the property value at the beginning of the particular year B. the annual cost for depreciation is same each year
C. the value of the asset can decrease to zero at the end of the service life D. the value of the asset decreases linearly with tiime

25.  Annual depreciation costs are constant
A. when the straight-line method is used B. when the sum-of-the-years-digits method is used
C. when the declining-balance method is used D. none of the above

26.  Which of the following methods results in book values greater than those obtained with the straight-line method?
A. Declining-balance method B. Sum-of-the-years-digits method
C. Sinking-fund method D. Multiple straight-line method

27.  The ratio of the total present value to the initial investment of a given project
A. remains constant with change in the discounted-cash-flow rate of return B. increases with increase in the discounted-cash flow rate of return
C. decreases with increase in the discounted-cash-flow rate of return D. increases exponentially with increase in the discounted cash flow rate of return

28.  For most chemical plants the ration of working capital to total capital investment varies from
A. 10 to 20 per cent B. from 80 to 90 per cent
C. from 51 to 65 per cent D. from 1 to 2 per cent




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