MCQs in Engineering Economics Part XXIV

Compiled MCQs in Engineering Economics Part 24 of the series as one topic in General Engineering and Applied Sciences (GEAS) in the ECE Board Exam.

MCQs in Engineering Economics

This is the Multiples Choice Questions Part 24 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 24: MCQs from Number 1151 – 1200                 Answer key: PART XXIV

Continue Practice Exam Test Questions Part XXIV of the Series

Choose the letter of the best answer in each questions.

1151. A couple borrowed P4,000 from a lending company for 6 years at 12%. At the end of 6 years, it renews the loan for the amount due plus P4,000 more for 3 years at 12%. What is the lump sum due?

  • a. P14,842.40
  • b. P16,712.03
  • c. P12,316.40
  • d. P15,382.60

1152. How long (in years) will it take the money to quadruple if it earns 7% compounded semi-annually?

  • a. 26.30 years
  • b. 40.30 years
  • c. 33.15 years
  • d. 20.15 years

1153. P200,000 was deposited on Jan. 1,1988 at an interest rate of 24% compounded semi-annually. How much would the sum be on Jan. 1, 1993?

  • a. P421,170
  • b. P521,170
  • c. P401,170
  • d. P621,170

1154. If P500,000 is deposited at a rate of 11.25% compounded monthly, determine the compounded interest after 7 years and 9 months.

  • a. P690,849
  • b. P670,258
  • c. P680,686
  • d. P660,592

1155. P200,000 was deposited at an interest rate of 24% compounded semi-annually. After how many years will the sum be P621,170?

  • a. 4 years
  • b. 3 years
  • c. 5 years
  • d. 6 years

1156. A bank is advertising 9.5% accounts that yields 9.84% annually. How often is the interest compounded?

  • a. monthly
  • b. bi-monthly
  • c. quarterly
  • d. daily

1157. A marketing company established a program to replace the cars of its sales representatives at the end of every 5 years. If the present price of the approved type of car is P520,000.00 with a resale value at the end of 5 years of 60% its present value, how much money must the company accumulate for 5 years if inflation annually is 10%. Release value will also appreciate at 10% yearly.

  • a. P120,289.51
  • b. P129,382.38
  • c. P110,297.27
  • d. P122,265.69

1158. In year zero, you invest P10,000.00 in a 15% security for 5 years. During that time, the average annual inflation is 6%. How much, in terms of year zero will be in the account at maturity?

  • a. P15,386.00
  • b. P15,030.00
  • c. P13,382.00
  • d. P16,653.00

1159. A machine has been purchased and installed at a total cost of P18,000.00. The machine will be retired at the end of 5 years, at which time it is expected to have a scrap value of P2,000.00 based on current prices. The machine will then be replaced with an exact duplicate. The company plans to establish a reserve fund to accumulate the capital needed to replace the machine. If an average annual rate of inflation of 3% is anticipated, how much capital must be accumulated?

  • a. P15,030.00
  • b. P18,548.39
  • c. P12,382.00
  • d. P15,386.00

1160. If the inflation rate is 6%, cost of money is 10%, what interest rate will take care of inflation and the cost of money?

  • a. 16.6%
  • b. 15.5%
  • c. 17.7%
  • d. 14.4%

1161. A man bought a government bond which cost P1000 and will pay P50 interest each year for 20 years. The bond will mature at the end of 20 years and he will receive the original P1000. If there is 2% annual inflation during this period, what rate of return will the investor receive after considering the effect of inflation?

  • a. 2.94%
  • b. 3.16%
  • c. 4.25%
  • d. 5.16%

1162. The inflated present worth of P2000 in two years is equal to P1471.07. What is the rate of inflation if the interest rate is equal to 10%?

  • a.  5% 
  • b. 6%
  • c. 7%
  • d. 4%

1163. 12% rate of interest can take care of the cost of money and inflation. If the nominal rate of interest is 6%, what is the rate of inflation?

  • a. 6.62%
  • b. 5.66%
  • c. 7.67%
  • d. 4.64%

1164. An engineer bought an equipment for P500,000. Other expenses including installations amounted to P30,000. At the end of its estimated useful life of 10 years, the salvage value will be 10% of the first cost. Using straight line method of depreciation, what is the book value after 5 years?

  • a. P214,242
  • b. P282,242
  • c. P242,241
  • d. P291,500

1165. A small machine costing P80,000 has a salvage value of x at the end of its life of 5 years. The book value at the end of the 4th year is P22,400. What is the value of x using the straight line method depreciation?

  • a. P6000
  • b. P7000
  • c. P8000
  • d. P9000

1166. A machine has a salvage value of P12,000 at the end of its useful life of 6 years. The book value at the end of 5 years is P30,833.33. Using a straight line method of depreciation, what is the first cost of the machine?

  • a. P125,500
  • b. P135,500
  • c. P125,000
  • d. P135,000

1167. A manufacturing plant was built at a cost of P5M and is estimated to have a life of 20 years with a salvage value of P1M. A certain equipment worth P570,000 was installed at a cost of P80,000 is expected to operate economically for 15 years with a salvage value of P50,000. Determine the book value of the plant and equipment after 10 years, use straight line depreciation method.

  • a. P3,250,000
  • b. P3,750,000
  • c. P4,250,000
  • d. P4,500,000

1168. A printing equipment costs P73,500 has a life expectancy of 8 years and has a salvage value of P3,500 at the end of its life. The book value at the end of x years is equal to P38,500. Using straight line method of depreciation, solve for the value of x.

  • a. 5 years
  • b. 4 years
  • c. 6 years
  • d. 3 years

1169. The cost of the printing equipment is P500,000 and the cost of handling and installation is P30,000. If the book value of the equipment at the end of the 3rd year is P242,000 and the life of the equipment is assumed to be 5 years, determine the salvage value of this equipment at the end of 5 years.

  • a. P50,000
  • b. P60,000
  • c. P53,000
  • d. P64,000

1170. An engineer bought an equipment for P500,000. He spent an additional amount of P30,000 for installation and other expenses. The salvage value is 10% of the first cost. If the book value at the end of 5 years will be P291,500 using straight line method of depreciation, compute the useful life of the equipment in years.

  • a. 6 years
  • b. 8 years
  • c. 10 years
  • d. 15 years

1171. The cost of equipment is P500,000 and the cost of installation is P30,000. If the salvage value is 10% of the cost of equipment at the end of 5 years, determine the book value at the end of the fourth year. Use straight line method.

  • a. P155,000
  • b. P140,000
  • c. P146,000
  • d. P132,600

For Problems 1172-1174:

The first cost of a machine is P1,800,000 with a salvage value of P300,000 at the end of its life of 5 years. Determine the total depreciation after 3 years.

1172. Using Straight Line Method

  • a. P800,000
  • b. P600,000
  • c. P900,000
  • d. P700,000

1173. Using Sum of Years Digit Method

  • a. P1,150,000
  • b. P1,200,000
  • c. P1,300,000
  • d. P1,350,600

1174. Using Constant Percentage Method

  • a. P1,355,024.24
  • b. P1,185,769.76
  • c. P1,246,422.53
  • d. P1,432,624.84

1175. An asset is purchased for P9,000.00. Its estimated economic life is 10 years after which it will be sold for P1,000.00. Find the depreciation in the first three years using straight line method.

  • a. P2,500
  • b. P2,400
  • c. P3,000
  • d. P2,000

1176. The purchase of a motor for P6000 and a generator for P4000 will allow the company to produce its own energy. The configuration can be assembled for P500. The service will operate for 1600 hours per year for 10 years. The maintenance cost is P300 per year, and cost to operate is P0.85 per hour for fuel and related cost. Using straight line depreciation, what is the annual cost for the operation? There is a P400 salvage value for the system at the end of 10 year.

  • a. P2,710
  • b. P2,480
  • c. P2,630
  • d. P2,670

1177. A machine has an initial cost of P50,00.00 and a salvage value of P10,000.00 after 10 years. What is the straight line method depreciation rate as a percentage of the initial cost?

  • a. 10%
  • b. 8%
  • c. 12%
  • d. 9%

1178. A machine has an initial cost of P50,00.00 and a salvage value of P10,000.00 after 10 years. What is the book value after 5 years using straight line method depreciation rate?

  • a. P35,000
  • b. P25,000
  • c. P15,500
  • d. P30,000

1179. A machine has a first of P80,000 and a salvage of P2,000 at the end of its life of 10 years. Find the book value at the end of the 6th year using straight line method of depreciation.

  • a. P33,200
  • b. P35,400
  • c. P34,300
  • d. P32,900

1180. An asset is purchased for P90,000.00. Its estimated life is 10 years after which it will be sold for P1,000.00. Find the book value during the first year if Sum of the Years Digits(SYD) depreciation is used.

  • a. P7,545.45
  • b. P2,980.24
  • c. P5,245.92
  • d. P6,259.98

1181. A telephone company purchased a microwave radio equipment for P6M. Freight and installation charges amounted to 3% of the purchased price. If the equipment shall be depreciated over a period of 8 years with a salvage value of 5%, determine the depreciation charge during the 5th year using the Sum of Year Digit Method.

  • a. P756,632.78
  • b. P957,902.56
  • c. P652,333.33
  • d. P845, 935.76

1182. A consortium of international communications companies contracted for the purchase and installation of a fiber optic cable linking two major Asian cities at a total cost of P960M. This amount includes freight and installation charges at 10% of the above total contract price. If the cable depreciated over a period of 15 years with zero salvage value, what is the depreciation charge during the 8th year using the sum of year digits method?

  • a. P64M
  • b. P23M
  • c. P80M
  • d. P76M

1183. A machine cost P7,350 has a life of 8 years and has a salvage value of P350 at the end of 8 years. Determine its book value at the end of 4 years using sum years digit method.

  • a. P3,476.90
  • b. P2,294.44
  • c. P6,543.21
  • d. P5,455.01

1184. A certain equipment costs P7,000 has an economic life of n years and a salvage value P350 at the end of n years. If the book value at the end of 4 years is equal to P2197.22, compute for the economic life of the equipment using the sum of years digit method.

  • a. 10 years
  • b. 16 years
  • c. 8 years
  • d. 11 years

1185. A company purchased an asset for P10000 and plans to keep it for 20 years. If the salvage value is zero at the end of the 20th year, what is the depreciation in the third year? Use sum of years digit method.

  • a. P1000
  • b. P857
  • c. P938
  • d. P747

1186. An equipment costs P7000 and has a life of 8 years and salvage value of x after 8 years. If the book value of the equipment at the 4th year is equal to P2197.22, compute the salvage value x using the sum of years digit method.

  • a. P594
  • b. P430
  • c. P350
  • d. P290

1187. ABC Corporation makes it policy that for every new equipment purchased, the annual depreciation should not exceed 20% of the first cost at any time without salvage value. Determine the length of service if the depreciation used is the SYD Method.

  • a. 9 years
  • b. 10 years
  • c. 12 years
  • d. 19 years

1188. A machine having a certain first cost has a life of 10 years and a salvage value of 6.633% of the first cost at the end of 10 years. If it has a book value of P58,914 at the end of the 6th year, how much is the first cost of the machine if the constant percentage of declining value is used in the computation for its depreciation.(Matheson’s Method)

  • a. P600,000
  • b. P300,000
  • c. P100,000
  • d. P900,000

1189. A machine costing P720,000 is estimated to have a life of 10 years. If the annual rate of depreciation is 25%, determine the total depreciation using a constant percentage of the declining balance method.

  • a. P679,454.27
  • b. P432,725.45
  • c. P532,825.73
  • d. P764,243.33

1190. An earth moving equipment that cost P90,000 will have an estimated salvage value of P18,000 at the end of 8 years. Using double-declining balance method, compute the book value and the total depreciation at the end of the 5th year.

  • a. P21,357.42 ; P68,642.58
  • b. P15,830.34 ; P74,169.66
  • c. P24,362.48 ; P65,637.52
  • d. P19,442.78 ; P70,557.22

1191. A certain office equipment has a first cost of P20,000 and has a salvage value of P1,000 at the end of 10 years. Determine the depreciation at the end of the 6th year using Sinking fund method at 3% interest.

  • a. P10,720
  • b. P12,420
  • c. P11,680
  • d. P9,840

1192. An equipment which cost P200,000 has a useful life of 8 years with a salvage value of P25,000 at the end of its useful life. If the depreciation at the first year is P21,875, what method is used in the calculation of depreciation?

  • a. Straight Line
  • b. Sinking Fund
  • c. Declining Balance
  • d. Sum of Years Digit

1193. An equipment costs P8,000 has an economic life of 8 years and salvage value of P400 at the end of 8 years. The first year depreciation amounts to P1,688.89. What method is used in the calculation of the depreciation?

  • a. Straight Line
  • b. Sinking Fund
  • c. Declining Balance
  • d. Sum of Years Digit

1194. The original cost of a certain machine is P150,000 and has an economic life of 8 years with a salvage value of P9,000 at that time. If the depreciation of the first year is equal to P44,475, what method is used in the calculation of the depreciation?

  • a. Straight Line
  • b. Sinking Fund
  • c. Declining Balance
  • d. Sum of Years Digit

1195. A machine has a first cost of P140,000 and a life of 8 years with a salvage value of P10,000 at the end of its useful life. If the depreciation at the first year amounts to P35,000, what method is used in the calculation of depreciation?

  • a. Double Declining Balance
  • b. Declining Balance
  • c. Straight Line
  • d. Sum of Years Digit

1196. A hydraulic machine cost P180,000 and has a salvage value of P15,000 at the end of its useful life which is 12 years. If the depreciation at the first year is P9,780.71, what method is used in computing the depreciation. Assume money is worth 6% annually.

  • a. Straight Line
  • b. Sinking Fund
  • c. Declining Balance
  • d. Sum of Years Digit

1197. An equipment costs P480,000 and has a salvage value of 10% of its cost at the end of its economic life of 35,000 operating hours. In the first year, it was used for 4,000 hours. Determine its book value at the end of the first year.

  • a. P430,629.00
  • b. P380,420.00
  • c. P418,360.00
  • d. P376,420.00

1198. An equipment costs P480,000 and has a salvage value of 10% of its cost at the end of its economic life of 36,000 operating hours in a period of 5 years. In the first year of service, it was used for 12,000 hours. If at the end of the 2nd year it was used for 15,000 hours, find the depreciation at the second year.

  • a. P180,000
  • b. P160,000
  • c. P190,000
  • d. P150,000

1199. A certain machine cost P40,000 and has a life of 4 years and a salvage value of P5000. The production output of this machine in units per year is 1000 units for the first year, 2000 units for the second year, 3000 units for the third year, and 4000 units for the fourth year. If the units produced are in uniform quality, what is the depreciation charge at the end of the fourth year.

  • a. P14,000
  • b. P13,000
  • c. P15,000
  • d. P16,000

1200. A lathe machine costs P300,000 brand new with a salvage value of x pesos. The machine is expected to last for 28500 hours in a period of 5 years. In the first year of service it was used for 8000 hours. If the book value at the end of the first year is P220,000, compute for the salvage value x in pesos.

  • a. P15,000
  • b. P18,000
  • c. P12,000
  • d. P20,000

Complete List of MCQs in General Engineering and Applied Science per topic


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