QUIZ # 1 ENGINEERING ECONOMICS

1. Mr Amjad is visiting the electronics shop to buy an AC for his bedroom. He noted GREE AC is Rs 1,00,000,
Dawlance AC Rs 85,000, and Hier AC Rs 95,000. What are these values indicate?
a. Price of AC
b. Value of AC
c. Cost of AC
2. A company continues to use its existing capacities to produce more juices in this summer to meet the
increasing market demands. The cost of production per juice is Rs20.No additional labor, equipment is
purchased for this additional production. What kind of cost is actually Rs 20 is?
a. Variable Cost
b. Fixed Cost
c. Incremental Cost
3. Which cost is not included in Engineering Economic Analysis?
d. Sunk Cost
e. Book Cost
f. Variable Cost
4. Mr. Aslam wishes to buy a TANNERY in Faisalabad. He has Rs 2 crores in hand but the factory costs Rs 2crore
and 70 lakhs. He look a loan of additional amount and is liable to monthly installments of Rs 35,000 to bank
on monthly basis at fixed interest rate. What kind of capital are these installments?
g. Fixed Capital
h. Working Capital
i. Investment Capital
5. Calculate the present value (PV) of Rs5,00,000 (FV) which will receivable in 5 years with an interest rate of
9%?
j. 3,24,965
k. 4,00,225
l. 3,22,825

6. The installment whose term is fixed when the term starts and ends on definite date is called.
a. Annuity certain
b. Ordinary Annuity
c. Fixed Annuity
7. The trade-in value of equipment after its full use is called.
a. Marginal Value
b. Incremental Value
c. Salvage Value
8. Chanda and Company wants to launch a 5 storey luxury apartment near new Islamabad Airport. They invest
Rs 5,000,000 (5 crore) to reach the third floor. They experienced shortage of funds to complete the project
and get loan from Habib Bank of Rs 3,000,000 (3crore) for 3 years period at the rate of Rs 75,000 per
quarter. They also received payments of Rs 50,000 per quarter from their other projects. Draw a cash flow
diagram for this investment scheme.
9. The interest rate at which the net present value of all the cash flows (both positive and negative) from a
project or investment equals to zero is called.
a. Internal Rate of Return
b. Break Even Point
c. Present Value

10. A situation where in the outcome that will occur is not known is called .
a. Uncertainty
b. Risk
c. Certainty
11. Risk or Uncertainty cases are determined using.
a. Rules of Mathematics
b. Economic Analysis
c. Probability
12. Any company or bank which failed to meet its short term financial demands is considered to be at.
a. Operational Risk
b. Liquidity Risk
c. Legal and regulatory risk
13. In comparing two projects of same kind (e.g. toy manufacturing). If during statistical data analysis the
standard deviation of any project comes out to be more than the other, that project is considered to be.
a. More Riskier
b. Safer
c. Uncertain