ENGINEERING ECONOMY (TERMS)

Question 1

A diagram drawn to help visualize and simplify problems having diverse receipts and disbursements is known as

Answer 1

Cash Flow

Question 2

An artificial expense that spreads the purchase price of an asset or another property over a number of years.

Answer 2

Depreciation

Question 3

It is also known as potential service life at which a property is physically able to perform functions as originally designed.

Answer 3

Physical Life

Question 4

It is a series of uniform accounts over an infinite period of time.

Answer 4

Perpetuity

Question 5

It is the amount which a willing buyer will pay to a willing seller for the property where each has equal advantage and is under no compulsion to buy or sell.

Answer 5

Market Value

Question 6

It is the value which is usually determined by a disinterested third party in order to establish a price that is fair to both the seller and the buyer.

Answer 6

Fair Value

Question 7

The reduction in the money value of a capital asset is called

Answer 7

Capital Loss

Question 8

Which of the following depreciation methods cannot have a salvage value of zero?

Answer 8

Declining Balance Method

Question 9

It is the period, usually in numbers years, needed to completely depreciate an asset.

Answer 9

Economic Life

Question 10

The amount transferred to depreciation is a fixed ratio of the undepreciated balance for the item.

Answer 10

Declining Balance Depreciation

Question 11

The true value of interest rate computed by equations for compound interest for a one-year period is known as

Answer 11

Effective Interest

Question 12

Which of the following is not a variable cost?

Answer 12

Insurance Costs

Question 13

The life wherein a property generates more income than the costs necessary for its operation and maintenance and produces desirable level of profit, is known as

Answer 13

Economic Life

Question 14

Sunk costs include

Answer 14

All in the list

Question 15

What is the length of time, usually in years, for cumulative net annual profit equal to investment?

Answer 15

Payback Period

Question 16

What do you call the present worth of the property which is equal to the original cost less depreciation?

Answer 16

Salvage Value

Question 17

It is the estimated value at the end of the useful life.

Answer 17

Salvage Value

Question 18

The recorded current value of an asset is known as

Answer 18

Book Value

Question 19

It is a method of depreciation where a fixed sum of money is regularly deposited at compound interest in a real or imaginary fund in order to accumulate an amount equal to the total depreciation of an asset at the end of the asset’s estimated life.

Answer 19

Sinking Fund Method

Question 20

In counting the number of days when computing simple interest,

Answer 20

The First Day Is Excluded And The Last Day Is Included

Question 21

It is a method of depreciation whereby the amount to recover is spread uniformly over the estimated life of the asset in terms of the periods or units of output.

Answer 21

Straight Line Method

Question 22

What is sometimes called second hand value?

Answer 22

Salvage Value

Question 23

It is a type of annuity where the first payment is made after several periods and not at the end of the first period.

Answer 23

Deferred Annuity

Question 24

It is the ratio of the interest payment to the principal for a given unit of time and usually expressed as a percentage of the principal.

Answer 24

Interest Rate

Question 25

The first cost of any property includes

Answer 25

All of the above

Question 26

It is an application of comprehensive techniques to predict the feasibility or economic outcome of a proposed engineering project.

Answer 26

Engineering Economy

Question 27

It is the cost of things that are neither labor nor material.

Answer 27

Expenses (Indirect cost/Fixed cost?)

Question 28

Which of the following is common to both the fixed and operating cost of an enterprise?

Answer 28

Interest

Question 29

It is a method of computing depreciation in which the annual charge is a fixed percentage of the depreciated book value at the beginning of the year to which the depreciation applies.

Answer 29

Declining Balance Method

Question 30

It is the worth of property which is equal to the original cost less depreciation.

Answer 30

Book Value

Question 31

It is an interest rate which specifies the actual rate of interest in one year.

Answer 31

Effective Rate

Question 32

It is defined as the future value minus the present value.

Answer 32

Interest

Question 33

A periodic cost that remains more or less unchanged irrespective of the output level or sales revenue, such as depreciation, insurance, interest, rent salaries, and wages.

Answer 33

Fixed Cost

Question 34

The alternatives which are standalone solutions for engineering economy problems involve

Answer 34

All in the list

Question 35

Which of the following statements is correct? a. The present value of the proposal's net cash flows, less the proposal's initial cash outflow is known as the Net Present Value (NPV). b. The discount rate that equates the present value of the expected Net Cash Flows (CFs) with the Initial Cash Outflow (ICO) is known as internal rate of return. c. All of the choices d. The number of years required to recover the initial cash investment in a project, is called Pay Back period (PBP).

Answer 35

All of the choices

Question 36

It is the current amount of money or its equivalent paid to acquire goods and services.

Answer 36

Price

Question 37

Period over which an asset (machine, property, computer system, etc.) Is expected to be usable, with normal repairs and maintenance, for the purpose it was acquired, rented, or leased

Answer 37

Economic Life

Question 38

It refers to the income needed to cover a manufacturer's total expenses in a given period of time.

Answer 38

Break-Even Point

Question 39

Which of the following is not a fixed cost?

Answer 39

Rent

Question 40

It is the length of time which the property may be operated at a profit.

Answer 40

Economic Life

Question 41

The efficiency of an investment is known as

Answer 41

Rate of Return

Question 42

It is a type of annuity where the payments are made at the end of each payment period starting from the first period.

Answer 42

Ordinary Annuity

Question 43

This refers to the length of time of property ownership by a specific person or entity from cradle to grave.

Answer 43

Ownership Life

Question 44

The amount deducted immediately from a loan, which is supposed to be the payment in some future time for the use of the said loan, is called

Answer 44

Discount

Question 45

The alternatives which are standalone solutions for engineering economy problems involve

Answer 45

All of these

Question 46

Aside from the straight line method of depreciation, what other method assumes a uniform annual depreciation

Answer 46

Sinking Fund Method

Question 47

It is the simplest form of a business organization. a Sole Proprietorship b. Partnership c. Enterprise d. Corporation

Answer 47

Sole Proprietorship

Question 48

The reduction in the money of a capital asset is called a. Capital gain b. Capital loss c. Debit d. Deficit

Answer 48

Capital loss

Question 49

The reduction of the value of an asset due to constant use and passage of time. a. Scrap Value b. Depletion c Depreciation d. Book Value

Answer 49

Depreciation

Question 50

When free competition exists, the price of a product will be that value where supply is equal to the demand. a. Law of Supply b. Law of Demand c. Law of Diminishing Return d Law of Supply and Demand

Answer 50

Law of Supply and Demand

Question 51

Which of the following depreciation methods cannot have a salvage value of zero? a. Straight Line Method b. Sinking Fund Method c. Declining Balance Method d. SYD Method

Answer 51

Declining Balance Method