MCQs in Engineering Economics Part X

Compiled MCQs in Engineering Economics Part 10 of the series as one topic in General Engineering and Applied Sciences (GEAS) in the ECE Board Exam.

This is the Multiples Choice Questions Part 10 of the Series in Engineering Economics as one of the General Engineering and Applied Sciences (GEAS) topic. In Preparation for the ECE Board Exam make sure to expose yourself and familiarize in each and every questions compiled here taken from various sources including past Board Questions in General Engineering and Applied Sciences (GEAS), Engineering Economy Books, Journals and other Engineering Economy References.

Online Questions and Answers in Engineering Economics Series

Following is the list of multiple choice questions in this brand new series:

Engineering Economics MCQs
PART 1: MCQs from Number 1 – 50                        Answer key: PART I
PART 2: MCQs from Number 51 – 100                   Answer key: PART II
PART 3: MCQs from Number 101 – 150                 Answer key: PART III
PART 4: MCQs from Number 151 – 200                 Answer key: PART IV
PART 5: MCQs from Number 201 – 250                 Answer key: PART V
PART 6: MCQs from Number 251 – 300                 Answer key: PART VI
PART 7: MCQs from Number 301 – 350                 Answer key: PART VII
PART 8: MCQs from Number 351 – 400                 Answer key: PART VIII
PART 9: MCQs from Number 401 – 450                 Answer key: PART IX
PART 10: MCQs from Number 451 – 500                 Answer key: PART X

Continue Practice Exam Test Questions Part X of the Series

Choose the letter of the best answer in each questions.

451. A bookstore purchased a best-selling book at P200.00 per copy. At what price should this book be sold so that by giving a 20% discount, the profit is 30%.

• A. P200.00
• B. P300.00
• C. P400.00
• D. P500.00

452. A businessman wishes to earn 7% on his capital after payment of taxes. If the income from an available investment will be taxed at an average of 42%, what minimum rate of return, before payment of taxes, must the investment offer to be justified?

• A. 13.02%
• B. 12.07%
• C. 10.89%
• D. 11.08%

453. A manufacturing firm maintains one product assembly line to produce signal generators. Weekly demand for the generators is 35 units. The line operates for 7 hours per day, 5 days per week. What is the maximum production time per unit in hours required of the line to meet the demand?

• A. 1 hour
• B. 1 hour and 10 minutes
• C. 1 hour and 15 minutes
• D. 1 hour and 30 minutes

454. Froyd Corporation’s gross margin is 45% of sales. Operating expenses such as sales and administration are 15% of sales. Froyd Corporation is in 40% tax bracket. What percent of sales is their profit after taxes?

• A. 21%
• B. 20%
• C. 19%
• D. 18%

455. In determining the cost involved in fabricating sub-assembly B within a company, the following data have been gathered:

Direct material - P0.30 per unit

Direct labor - P0.50 per unit

Testing set-up - P300.00 per set-up

It is decided to subcontract the manufacturing of assembly B to an outside company. For an order of 100 units, what is the cost per unit that is acceptable to the company?

• A. P3.80
• B. P4.00
• C. P4.10
• D. P4.20

456. By selling balut at P5 per dozen, a vendor gains 20%. The cost of the eggs rises by 12.5%. If he sells at the same price as before, find his new gain in %.

• A. 6.89%
• B. 6.67%
• C. 6.58%
• D. 6.12%

457. An equipment installation job in the completion stage can be completed in 50 days of 8 hour/day work, with 50 men working. With the contract expiring in 40 days, the mechanical engineer contractor decided to add 15 men on the job, overtime not being permitted.

If the liquidated damages is P5,000 per day of delay, and the men are paid P150 per day, how much money would he save with the additional workers?

• A. P43,450
• B. P43,750
• C. P44,250
• D. P44,750

458. In a certain department store, the monthly salary of a saleslady is partly constant and partly varies as the value of her sales for the month. When the value of her sales for the month is P10,000.00, her salary for the month is P900.00. When her monthly sales go up to P12,000.00, her monthly salary goes up to P1,000.00. What must be the value of her sales so that her salary for the month will be P2,000.00?

• A. P30,000
• B. P31,000
• C. P32,000
• D. P33,000

459. Jojo bought a second-hand Betamax VCR and then sold it to Rudy at a profit of 40%. Rudy then sold the VCR to Noel at a profit of 20%. If Noel paid P2,856 more than it costs Jojo, how much did Jojo pay for the unit?

• A. P4,100
• B. P3,900
• C. P4,000
• D. P4,200

460. The selling price of a TV set is double that of its net cost. If the TV set is sold to a customer at a profit of 25% of the net cost, how much discount was given to the customer?

• A. 37.5%
• B. 37.9%
• C. 38.2%
• D. 38.5%

461. A Mechanical Engineer who was awarded a P450,000 contract to install the machineries of an oil mill failed to finish the work on time. As provided for in the contract, he has to pay a daily penalty equivalent to one fourth of one per cent per day for the first 10 days and 0.5% per day for the next 10 days and one per cent per day for everyday thereafter. If the total penalty was P60,750.00, how many days was the completion of the contract delayed?

• A. 26 days
• B. 27 days
• C. 28 days
• D. 29 days

462. The quarrying cost of marble and granite blocks plus delivery cost to the processing plant each is P2,400.00 per cubic meter. Processing cost of marble into tile is P200.00 per square meter and that of the granite into tiles also is P600.00 per square meter.

If marble has a net yield of 40 square meters of tile per cubic meter of block and sells P400 per square meter, and granite gives a net yield of 50 square meters of tiles per cubic meter of block and sells at P1000 per square meter. Considering all other costs to be the same, the granite is more profitable than the marble by how much?

• A. P12,000 per cubic meter
• B. P13,000 per cubic meter
• C. P14,000 per cubic meter
• D. P15,000 per cubic meter

463. A man would like to invest P50,000 in government bonds and stocks that will give an overall annual return of about 5%. The money to be invested in government bonds will give an annual return of 4.5% and the stocks of about 6%. The investments are in units of P100.00 each. If he desires to keep his stock investment to minimum in order to reduce his risk, determine how many stocks should be purchased.

• A. 165
• B. 166
• C. 167
• D. 168

464. A 220 V 2 hp motor has an efficiency of 80%. If power costs P3.00 per kw-hr for the first 50 kw-hr, 2.90 per kw-hr for the second 50 kw-hr, P2.80 for the third kw-hr and so on until a minimum of P2.50 per kw-hr is reached. How much does it cost to run this motor continuously for 7 days?

• A. P800
• B. P820
• C. P840
• D. P860

465. An 8-meter concrete road pavement 500 meters long is desired to be constructed over a well-compacted gravel road, together with the necessary concrete curbs and gutters on both sides. In order to put the subgrade on an even level grade, a 500 cubic meters of sand filling is necessary, over which the 10 inch concrete pavement will be placed?

Assume the following data:

A. Sand fill, including rolling and watering = P100 per cubic meter

B. Concrete pavement, 10 in thick (labor and materials) including curing = P220 per sq. Meter

C. Curbs and gutters = P12 per linear meter

How much will the project cost allowing 15% for contingency?

• A. P1,207,000
• B. P1,207,500
• C. P1,208,000
• D. P1,208,500

466. An electric utility purchases 2,300,000 kw-hr per month of electric energy from National Power Corporation at P2.00 per kw-hr and sells all this to consumers after deducting distribution losses of 20%. At what average rate per kw-hr should this energy be sold to break even if the following are other monthly expenses in its operation:

 Taxes 2.5 % of gross revenue Salaries P750,000 Depreciation P2,250,000 Interest P700,000 Maintenance P300,000 Miscellaneous P200,000

• A. P4.90
• B. P5.20
• C. P5.90
• D. P6.30

467. An engineer bidding on the asphalting of 7 km stretch of road is confronted with a problem of choosing between two possible sites on which to set-up the asphalt-mixing machine.

 Site A Site B Average hauling distance 2.5 km 2.75 km Monthly rental P35,000 P6,500 Installing and dismantling of machine P20,000 P10,000

At Site A, it would be necessary to hire 2 flagmen at P150 per working day. The job can be completed in 32 weeks working 6 days a week. The project requires 16,670 cubic meter of asphalt mix per kilometre of road. If the asphalt mix is to be hauled by a contractor at P42 per cubic meter per km of haul. How much is site B more expensive than site A?

• A. P949,645
• B. P962,101
• C. P956,807
• D. P974,090

468. A fixed capital investment of P10,000,000 is required for a proposed manufacturing plant and an estimated working capital of P2,000,000. Annual depreciation is estimated to be 10% of the fixed capital investment. Determine the rate of return on the total investment if the annual profit is P2,500,000.

• A. 28.33%
• B. 29.34%
• C. 30.12%
• D. 30.78%

469. A call to bid was advertised in the Philippine Daily Inquirer for the construction of a transmission line from a mini-hydroelectric power plant to the substation which is 5.035 kilometers away. The tanalized timber electrical posts must be placed at an interval of 50 m. The electrical posts must be 30 feet long, 8 inches in diameter at the tip and 12 inches in diameter at the butt. The power house is 15 m from the first electric post and the substation is 20 m from the last electric post. Compute the estimated cost for the project using the following data:

Cost of one tanalized timber post 30 feet long is P5,000 including delivery to the site. Labourer at P180 per day and 5 laborers can dig and erect 3 posts per day. Electrician at P250 per day and 4 electricians can strung wires complete 150 meters per day. Electric wire cost P4.00 per meter. Use only 5 laborers and 4 electricians for the project and is supervised by a foreman which is paid at P400 per day. Contingency is 10% and profit is 25%.

• A. P745,890.23
• B. P817,692.00
• C. P789,120.80
• D. P829,592.50

470. Upon the retirement after 44 years in government service, Mrs. Salud Araoarao was able to get a retirement lump sum of P2,300,000. As a hedge against inflation, she decided to use a part of it invested in real state at Pagadian City and the remainder were invested as follows:

A. 30% in T-bills earning 12% interest

B. 35% in money market placement earning 14%

C. 35% in blue chip stock earning 13%

If her annual earnings from the T-bills, money market and stock is P50,000, How much did she invests in real estate?

• A. P2,091,639.12
• B. P1,916,858.24
• C. P1,856,120.53
• D. P1,790,274.78

471. The monthly demand for ice cans being manufactured by Mr. Alarde is 3200 pieces. With a manual operated guillotine, the unit cuffing cost is P25.00. An electrically operated hydraulic guillotine was offered to Mr. Alarde at a price of P275,000.00 and which cuts by 30% the unit cuffing cost. Disregarding the cost of money, how many months will Mr. Alarde be able to recover the cost of the machine if he decides to buy now?

• A. 10 months
• B. 11 months
• C. 12 months
• D. 13 months

472. In a new gold mining area in Southern Leyte the ore contains on the average of ten ounces of gold per ton. Different methods of processing are tabulated as follows:

 Processing Method Cost per ton % Recovery A P5,500 90 B P2,500 80 C P400 70

If gold can be sold at P4,000 per ounce, which method of processing yield the biggest return?

• A. Processing method A
• B. Processing method B
• C. Processing method C
• D. Either of the processing methods B or C

473. JRT Motors Inc. has been shipping its Suzuki engines in containers to avoid the necessary crating of the engines. JRT Motors Inc. will pay freight on container load of 40 tons, regardless of whether or not the container is completely filled with engines. Record shows that due to engine size, JRT Motors Inc. has shipped only 30 tons per container. Freight of container cost P3.00 per kilograms.

If the engines are crated so that they can be shipped at the rate of P3.50 per hundred kilograms with the freight bill computed only on the actual weight shipped. The cost of crating would be P50 per engine and would increase the shipping weight from 1500 kg to 1520 kg per engine. How much more economical shipping the engine in crates than in containers?

• A. P670 per engine
• B. P630 per engine
• C. P650 per engine
• D. P610 per engine

474. A paint manufacturing company uses a sand mill for fine grinding of paint with an output of 100 liters per hour using glass beads as grinding media. Media load in the mill is 25 kg costing P200.00 per kg and is fully replenished in 2 months time at 8 hours per day operation, 25 days a month. A ceramic grinding media is offered to this paint company, costing P400 per kg and needs 30 kg load in the sand mill, but guarantees an output of 120 liters per hour and full replenishment of media in 3 months. If profit on paint reduction is P15 per liter how much is a difference in profit between the two media?

• A. P436,900
• B. P462,000
• C. P473,000
• D. P498,200

475. If P1000 accumulates to P1500 when invested at a simple interest for three years, what is the rate of interest?

• A. 14.12%
• B. 15.89%
• C. 16.67%
• D. 16.97%

476. You loan from a loan firm an amount of P100,000 with a rate of simple interest of 20% but the interest was deducted from the loan at the time the money was borrowed. If at the end of one year, you have to pay the full amount of P100,000, what is the actual rate of interest?

• A. 23.5%
• B. 24.7%
• C. 25.0%
• D. 25.8%

477. A loan of P5,000 is made for a period of 15 months, at a simple interest rate of 15%, what future amount is due at the end of the loan period?

• A. P5,937.50
• B. P5,873.20
• C. P5,712.40
• D. P5,690.12

478. If you borrowed money from your friend with simple interest at 12%, find the present worth of P50,000, which is due at the end of 7 months.

• A. P46,728.97
• B. P47,098.12
• C. P47,890.12
• D. P48,090.21

479. Mr. J. Reyes borrowed money from the bank. He received from the bank P1,842 and promised to repay P2,000 at the end of 10 months. Determine the rate of simple interest.

• A. 12.19%
• B. 12.03%
• C. 11.54%
• D. 10.29%

480. If you borrowed P10,000 from a bank with 18% interest per annum, what is the total amount to be repaid at the end of one year?

• A. P10,900
• B. P11,200
• C. P11,800
• D. P12,000

481. A price tag of P1,200 is payable in 60 days but if paid within 30 days it will have a 3% discount. Find the rate of interest.

• A. 35.45%
• B. 35.89%
• C. 36.18%
• D. 37.11%

482. A man borrowed P2,000 from a bank and promised to pay the amount for one year. He received only the amount of P1,920 after the bank collected an advance interest of P80.00. What was the rate of discount?

• A. 3.67%
• B. 4.00%
• C. 4.15%
• D. 4.25%

483. A man borrowed P2,000 from a bank and promised to pay the amount for one year. He received only the amount of P1,920 after the bank collected an advance interest of P80.00. What was the rate of interest that the bank collected in advance?

• A. 4.00%
• B. 4.07%
• C. 4.17%
• D. 4.25%

484. What will be the future worth of money after 12 months if the sum of P25,000 is invested today at simple interest rate of 1% per year?

• A. P25,168
• B. P25,175
• C. P25,189
• D. P25,250

485. What will be the future worth of money after 12 months if the sum of P25,000 is invested today at simple interest rate of 1% per month?

• A. P28,000
• B. P28,165
• C. P28,289
• D. P28,250

486. 480 It is the practice of almost all banks in the Philippines that when they grant a loan, the interest for one year is automatically deducted from the principal amount upon release of money to a borrower. Let us therefore assume that you applied for a loan with a bank and the P80,000 was approved at an interest rate of 14% of which P11,200 was deducted and you were given a check of P68,800. Since you have to pay the amount of P80,000 one year after, what then will be the effective interest rate?

• A. 16.02%
• B. 16.28%
• C. 16.32%
• D. 16.47%

487. A deposit of P110,000 was made for 31 days. The net interest after deducting 20% withholding tax is P890.36. Find the rate of return annually.

• A. 11.50%
• B. 11.75%
• C. 11.95%
• D. 12.32%

488. P5,000 is borrowed for 75 days at 16% per annum simple interest. How much will be due at the end of 75 days?

• A. P5,066.67
• B. P5,133.33
• C. P5,050.00
• D. P5,166.67

489. A businessman wishes to earn 7% on his capital after payment of taxes. If the income from an available investment will be taxed at an average rate of 42%, what minimum rate of return, before payment of taxes, must the investment offer to be justified?

• A. 12.07%
• B. 12.34%
• C. 12.67%
• D. 12.87%

490.  A man borrowed P20,000 from a local commercial bank which has a simple interest of 16% but the interest is to be deducted from the loan at the time that the money was borrowed and the loan is payable at the end of one year. How much is the actual rate of interest?

• A. 19.05%
• B. 19.34%
• C. 19.67%
• D. 19.87%

491. P4,000 is borrowed for 75 days at 16% per annum simple interest. How much will be due at the end of 75 days?

• A. P4,033.33
• B. P4,333.33
• C. P4,133.33
• D. P4,666.67

492. Agnes Abanilla was granted a loan of P20,000 by her employer CPM Industrial Fabricator and Construction Corporation with an interest rate of 6% for 180 days on the principal collected in advance. The corporation would accept a promissory note for P20,000 non-interest for 180 days. If discounted at once, find the proceeds of the note.

• A. P18,800
• B. P18,900
• C. P19,000
• D. P19,100

493. If you borrow money from your friend with simple interest of 12%, find the present worth of P20,000 which is due at the end of nine months.

• A. P18,992.08
• B. P18,782.18
• C. P18,348.62
• D. P18,120.45

494. A man borrowed from a bank under a promissory note that he signed in the amount of P25,000.00 for a period of one year. He receives only the amount of P21,915.00 after the bank collected the advance interest and an additional of P85.00 for notarial and inspection fees. What was the rate of interest that the bank collected in advance?

• A. 13.05%
• B. 13.22%
• C. 13.46%
• D. 13.64%

495. Mr. Danilo Conde borrowed money from a bank. He received from the bank P1,340.00 and promised to pay P1,500.00 at the end of 9 months. Determine rate of simple interest.

• A. 15.92%
• B. 15.75%
• C. 15.45%
• D. 15.08%

496. Mr. J. Dela Cruz borrowed money from a bank. He receives from the bank P1,340.00 and promised to pay P1,500.00 at the end of 9 months. Determine the corresponding discount rate or often referred to as the “banker’s discount.”

• A. 13.15%
• B. 13.32%
• C. 13.46%
• D. 13.73%

497. Annie buys a television set from a merchant who ask P1,250.00 at the end of 60 days. Annie wishes to pay immediately and the merchant offers to compute the cash price on the assumption that money is worth 8% simple interest. What is the cash price?

• A. P1,124.67
• B. P1,233.55
• C. P1,289.08
• D. P1,302.67

498. A man borrowed money from a loan shark. He receives from the loan shark and amount of P1,342.00 and promised to repay P1,500.00 at the end of 3 quarters. What is the simple interest rate?

• A. 15.47%
• B. 15.69%
• C. 15.80%
• D. 15.96%

499. Determine the exact simple interest on P5,000 invested for the period from January 15,1996 to October 12,1996, if the rate interest is 18%.

• A. P664.23
• B. P664.89
• C. P665.21
• D. P666.39

500. The exact simple interest of P5,000 invested from June 21,1995 to December 25,1995 is P100. What is the rate of interest?

• A. 3.90%
• B. 3.92%
• C. 3.95%
• D. 3.98%

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