# MCQs in Engineering Economics Part XXVII

Compiled MCQs in Engineering Economics Part 27 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 27 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 27: MCQs from Number 1301 – 1350                 Answer key: PART XXVII

### Continue Practice Exam Test Questions Part XXVII of the Series

Choose the letter of the best answer in each questions.

1301. 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 and the minimum pay out period if the annual profit is P2,500,000.

• a. 20.38% ; 2.68
• b. 20.83% ; 2.86
• c. 23.80% ; 6.28
• d. 23.08% ; 6.66

1302. A 500kw electric lighting plant cost P95 per kw installed. Fixed charges is 14%, operating cost is P0.013 per kw-hr. The plant averages 150kw for 5000 hour of the year, 420 kw for 1000 hour and 20kw for the remainder. What is the unit cost of production of electric energy?

• a. P0.0184
• b. P0.1084
• c. P0.1840
• d. P0.8104

1303. 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 percent per day for the next ten days and one percent per day for every day thereafter. If the total penalty was P60750, how many days was the completion of the contract delayed?

• a. 30 days
• b. 22 days
• c. 26 days
• d. 24 days

1304. 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 %.

• a. 5.5%
• b. 6.6%
• c. 7.7%
• d. 7.6%

1305. 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, her salary for that month is P900, when her monthly sales goes up to P12,000, her monthly salary goes up to P1,000. What must be the value of her sales for the month so that her salary for that month would be P2,000?

• a. P32,000
• b. P35,000
• c. P30,000
• d. P40,000

1306. 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 P5,00 per day of delay, and the men are paid P150 per day, how much money would he save with the additional workers?

• a. P44570
• b. P44750
• c. P47540
• d. P45407

1307. 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 cost Jojo, how much did Jojo pay for the unit?

• a. P2200
• b. P4400
• c. P2400
• d. P4200

1308. Dalisay Corporation’s gross margin is 45% of sales. Operating expenses such as sales and administration are 15% of sales. Dalisay is in 40% tax bracket. What percent of sales is their profit after taxes?

• a. 18%
• b. 5%
• c. 24%
• d. 0%

1309. A manufacturer of sports equipment produces tennis rackets for which there is a demand of 200 per month. The production setup cost for each lot of racket is O300. IN addition, the inventory carrying cost for each racket is P24 per year. Using the Economic Order Quantity (EQQ) model, which is the best production batch size fro the rackets?

• a. 71 units
• b. 173 units
• c. 245 units
• d. 346 units

1310. 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. 0.75 hours
• c. 3 hours
• d. 2.25 hours

1311. 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 or return, before payment of taxes, must the investment offer to be justified?

• a. 12.1%
• b. 10.7%
• c. 11.1%
• d. 12.7%

1312. A 200 hp generator is being considered for purchase. The generator will cost P320,000 with a life expectancy of 10 years, with an efficiency of 82%. The maintenance cost per year is P5,000. This generator is used for 300 hours per year and the cost of fuel, oil is P0.12 per kilowatt-hour. (1hp = 0.746kw). Assuming the generator will have no salvage value, what will be the monthly cost of maintaining the generator?

• a. P842.40
• b. P962.52
• c. P786.40
• d. P695.40

1313. An engineer buys a machine costing P500,000. Compute the capitalized cost if the machine has a life of 5 years and a salvage value of P80,000. Rate of interest is 12% per annum.

• a. P2,424,732
• b. P1,050,934
• c. P2,431,643
• d. P5,124,153

1314. A project costing P250,000 yields a yearly benefit of P80,000 for a period of 10 years with no salvage value at an interest rate of 6%. What is the benefit cost ratio?

• a. 4.24
• b. 3.85
• c. 2.36
• d. 4.30

1315. A company constructed its factory with a fixed capital investment of P120M. The net income after the tax and depreciation is expected to be P23m per year. Annual depreciation cost is 10 % of fixed capital investment. Determine the payout period in years.

• a. 3.04 years
• b. 2.54 years
• c. 3.43 years
• d. 4.85 years

1316. A machinery costing P720,000 is estimated to have a book value of P40,545.73 when retired at the end of 10 years. Depreciation cost is computed using a constant percentage of the declining book value. What is the annual rate of depreciation?

• a. 20%
• b. 25%
• c. 30%
• d. 35%

1317. An asset is purchased for P9,000. Its estimated economic life is 10 years after which it will be sold for P1,000. Find the depreciation in the first three years using straight line method.

• a. P2,400.00
• b. P2,412.34
• c. P2,250.00
• d. P2,450.00

1318. An engineer bought an equipment for P500,000. He spent an additional amount of P30,000 for installation and other expenses. The estimated useful life of the equipment is 10 years. The salvage value is x% of the first cost. Using the straight line method of depreciation, the book value at the end of 5 years will be P291,500. What is the value of x?

• a. 20%
• b. 40%
• c. 30%
• d. 10%

1319. The initial cost of a paint sand mill, including its installation is P800,000. The BIR approved life of this machine is 10 years for depreciation. The estimated salvage value of the mill is P50,000 and the cost of dismantling is estimated to be P15,000. Using straight line depreciation, what is the annual depreciation charge?

• a. P75,500
• b. P76,000
• c. P76,500
• d. P77,000

1320. The initial cost of a paint sand mill, including its installation is P800,000. The BIR approved life of this machine is 10 years for depreciation. The estimated salvage value of the mill is P50,000 and the cost of dismantling is estimated to be P15,000. Using straight line depreciation, what is book value of the machine at the end of 6 years?

• a. P341,000
• b. P343,000
• c. P340,000
• d. P342,000

1321. A unit of welding machine cost P45,000 with an estimated life of 5 years. Its salvage value is P2,500. Find its depreciation rate by straight line method.

• a. 18.89%
• b. 19.21%
• c. 19.58%
• d. 19.89%

1322. A tax and duty free importation of a 30hp sand mill for painting manufacturing cost P360,000. Bank charges and brokerage cost P5,000. Foundation and installation costs were P25,000. Other incidental expenses amount to P20,000. Salvage value of the mills estimated to be P60,000 after 20 years. Find the appraisal value of the mill using straight line depreciation at the end of 10 years.

• a. P234,000
• b. P235,000
• c. P234,500
• d. P235,500

1323. An equipment costs P10,000 with a salvage value of P500 at the end of 10 years. Calculate the annual depreciation cost by sinking fund method at 4% interest.

• a. P721.54
• b. P724.56
• c. P791.26
• d. P721.76

1324. An equipment costs P50,000 with a salvage value of P250 at the end of 10 years. Calculate the annual depreciation cost by sinking fund method at 8% interest.

• a. P3123.53
• b. P3223.75
• c. P3434.22
• d. P3241.24

1325. An asset is purchased for P12,000. Its estimated economic life is 20 years after which it will be sold for P5,000. Find the depreciation in the first five years using straight line method.

• a. P1,450
• b. P1,412
• c. P1,250
• d. P1,750

1326. What is the difference of the amount 5 years from now for a 12% simple interest and 12% compound interest per year?(P8,000 accumulated)

• a. P1298.73
• b. P1281.24
• c. P1224.97
• d. P1862.76

1327. Find the discount if P5,500 is discounted for 9 months at 15% compounded quarterly.

• a. P2442.09
• b. P1248.24
• c. P1883.66
• d. P2451.99

1328. Find the ordinary simple interest at 7.5% on P5000 and the corresponding amount at the end of 59 days.

• a. P2145.24
• b. P2241.12
• c. P5061.45
• d. P5123.24

1329. Find the exact simple interest at 7.5% on P5000 and the corresponding amount at the end of 59 days.

• a. P5187.24
• b. P5221.12
• c. P5021.45
• d. P5060.60

1330.) If P1050 accumulate P1275 when invested at a simple interest for 3 years. What is the rate of interest?

• a. 4.21%
• b. 5.85%
• c. 6.73%
• d. 7.14%

1331. Determine the exact simple interest on P5,000 investment for the period from January 15, 1996 to October 12, 1996 of the rate of interest in 18%.

• a. P666.39
• b. P621.22
• c. P632.40
• d. P636.29

1332. The exact simple interest of P5000, invested from June 21, 1995 to December 25, 1995, is P100. What is the rate of interest?

• a. 2.4%
• b. 3.2%
• c. 2.7%
• d. 3.9%

1333. The amount of P50,000 was deposited in the bank earning at 7.5% per annum. Determine the total amount at the end of 5 years if the principle and interest were not withdrawn during the period.

• a. P24,257.75
• b. P71,781.47
• c. P70,024.29
• d. P29,240.99

1334. Determine the future amount of P100 for 10.25 years at a rate of 5% compounded monthly.

• a. P166.77
• b. P224.09
• c. P163.12
• d. P214.12

1335. Determine the future amount of P100 for 10.25 years at a rate of 5% compounded quarterly.

• a. P124.02
• b. P166.42
• c. P182.42
• d. P175.10

1336. Determine the future amount of P100 for 10.25 years at a rate of 5% compounded semi-annually.

• a. P153.29
• b. P165.90
• c. P169.22
• d. P173.24

1337. Determine the future amount of P100 for 10.25 years at a rate of 5% compounded daily.

• a. P129.24
• b. P166.94
• c. P195.32
• d. P128.87

1338. What is the present worth of a P500 annuity starting at the end of the third year and continuing to the end of the fourth year, if the annual interest rate is 10%?

• a. P717.17
• b. P252.91
• c. P720.24
• d. P287.09

1339. Today a businessman borrowed money to be paid in 10 equal payments for 10 quarters. If the interest rate is 10% compounded quarterly and the quarterly payment is P2,000, how much did he borrow?

• a. P24214.23
• b. P24311.53
• c. P15125.24
• d. P17504.13

1340. What annuity is required over 12 years to equate with a future amount of P20,000? Assume i=6% annually.

• a. P1121.24
• b. P1244.22
• c. P2314.12
• d. P1185.54

1341. Find the annual payment to extinguish a debt of P10,000 payable for 6 years at 12% interest annually.

• a. P2214.42
• b. P2432.26
• c. P2525.24
• d. P2044.83

1342. A bond issue of P50,000 in 10 years, bonds in P1000 units paying 10% interest in annual payments, must be retired by the use of sinking fund which earns 8% compounded annually. What is the total cost for the interest ad retirement of the entire bond issue.

• a. P82,241
• b. P84,150
• c. P82,214
• d. P84,510

1343. Determine the amount of interest you would receive per period if you purchase a 6%, P5000 bond which matures in 10 years with interest payable quarterly.

• a. P24
• b. P98
• c. P75
• d. P52

1344. A corporation floats callable bonds amounting to P100,000 each having a par value of P500, the bond rate is 7.5% and the bonds are to be retired in 5 years, the annual payments being as nearly equal as possible. What is the total payment for the whole period of 5 years?

• a. P123,625
• b. P124,241
• c. P214,124
• d. P923,124

1345. A book store purchased the best selling book at P200. At what price should this book be sold so that by giving a 20% discount, the profit is 30%.

• a. P200
• b. P300
• c. P400
• d. P500

1246. 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. 35.8%
• b. 37.5%
• c. 34.5%
• d. 44.5%

1347. 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. 2 hours
• c. 3 hours
• d. 4 hours

1348. Mahusay Corporation’s gross margin is 55% of sales. Operating expenses such as sales and administration are 5% of sales. Mahusay is in 40% tax bracket. What percent of sales is their profit after taxes?

• a. 20%
• b. 30%
• c. 40%
• d. 50%

1349. How much money must you invest in order to withdraw P5000 annually for 20 years if the interest rate is 12%?

• a. P37,347.22
• b. P23,325.23
• c. P38,243.29
• d. P27,124.09

1350. If interest is at rate of 10% compounded semi-annually, what sum must be invested at the end of each 6 months to accumulate a fund of P12,000 at the end of 8 years?

• a. P507.24
• b. P451.24
• c. P247.24
• d. P694.92

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

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