T Final Mock Exam: Engineering Economics and Management

1. A company invests P 10,000 today to be repaid in 5 years in one lump sum at 12% compounded annually. How much profit in present day pesos is realized?

A. P 7632

B. P 7236

C. P 7326

D. P 7362

A. P 7632

2. The true value of interest rate computed by equations for compound interest for a 1 year period is known as

A. effective interest

B. expected return

C. interest

D. nominal interest

A. effective interest

3. A house and lot can be acquired by a downpayment of P 500,000 and a yearly payment of P 100,000 at the end of each year for a period of 10 years, starting at the end of 5 years from the date of purchase. If money is worth 14% compounded annually, what is the cash price of the property?

A. P 810,100

B. P 808,811

C. P 801,900

D. P 805,902

B. P 808,811

4. XYZ Corporation manufactures bookcases that sells for P 65.00 each. It costs XYZ Corporation P 35,000 per year to operate its plant. This sum includes rent, depreciation charges on equipment, and salary payments. If the cost to produce one bookcase is P 50.00, how many cases must be sold each year for XYZ to avoid taking a loss?

A. 2334

B. 539

C. 750

D. 2333

A. 2334

5. An equipment costs P 10,000 with a salvage value of P 500 at the end of 10 years. Calculate the annual depreciation cost by sinking fund method at 4% interest.

A. P 791.26

B. P 950.00

C. P 71.12

D. P 845.32

A. P 791.26

6. The function of interest rate and time that determines the cumulative amount of a sinking fund resulting from specific periodic deposits.

A. Capacity factor

B. Demand factor

C. Present worth factor

D. Sinking fund factor

D. Sinking fund factor

7. An employee plans to retire in exactly one year and wants an account that will pay him P 25,000 a year for the next 15 years. Assuming a 6% annual effective interest rate. What is the amount need to deposit now? (The fund will be depleted after 15 years)

A. P 242,608.32

B. P 242,680.22

C. P 242,806.22

D. P 242,860.22

C. P 242,806.22

8. It denotes the fall in the exchange rate of one currency in terms of others, the term usually applies to floating exchange rates.

A. Currency depreciation

B. Currency float

C. Currency appreciation

D. Currency devaluation

A. Currency depreciation

9. Worth of the property as shown in the accounting records of an enterprise.

A. Fair value

B. Market value

C. Salvage value

D. Book value

D. Book value

10. It is success in realizing an appropriate income in relation to the investment employed.

A. Solvency

B. Insolvency

C. Financial Stability

D. Profitableness

D. Profitableness

11. An asset is purchased for P 9,000.00. Its estimated life is 10 years after which it will be sold for P 1,000.00. Find the book value during the first year if sum-of-years' digit (SYD) depreciation is used.

A. P 8,000.00

B. P 6,500.00

C. P 7,545.00

D. P 6,000.00

C. P 7,545.00

12. P 1,500.00 was deposited in a bank account, 20 years ago. Today it is worth P 3,000.00. Interest is paid semi-annually. Determine the interest rate paid on this account.

A. 3.5%

B. 29%

C. 35%

D. 4%

A. 3.5%

13. In year 0, you invest P 10,000.00 in a 15% security for 5 years. During that time, the average annual inflation is 6%. How much, in terms of year 0 pesos will be in the account at maturity?

A. P12,020

B. P 13,030

C. P 14,040

D. P 15,030

D. P 15,030

14. By the condition of a will, the sum of P 20,000 is left to a girl to be held in trust fund by her guardian until it amounts to P 50,000. When will the girl receive the money if the fund is invested at 8% compounded quarterly?

A. 7.98 years

B. 10.34 years

C. 11.57 years

D. 10.45 years

C. 11.57 years

15. A sum of P 1,000 is invested now and left for eight years, at which time the principal is withdrawn. The interest that was accrued is left for another eight years. If the effective annual interest rate is 5%, what will be the withdrawal amount at the end of the 16th year?

A. P 706.00

B. P 500.00

C. P 774.00

D. P 799.00

A. P 706.00

16. What refers to the price at which the quantity demanded of a good is exactly equal to the quantity supplied?

A. Fair market price

B. Exact market price

C. Real market price

D. Equilibrium market price

D. Equilibrium market price

17. Claims against a person or corporation which must be paid in the near future.

A. Current liability

B. Fixed liability

C. Pre-paid income

D. Debt

A. Current liability

18. A currency traded in a foreign exchange market for which the demand is consistently high in relation to its supply.

A. Certificate of deposit

B. Hard currency

C. Money market

D. Treasury bill

B. Hard currency

19. Find the present value in pesos, of a perpetuity of P15,000 payable semi-.annually if money is worth 8% compounded quarterly.

A. P 372,637

B. P 374,977

C. P 373,767

D. P 371,287

B. P 374,977

20. On his 6th birthday a boy is left an inheritance. The inheritance will be paid in a lump sum of P 10,000 on his 21th birthday. What is the present value of the inheritance as of the boy's 6th birthday, if the interest is compounded annually? Assume i = 4%

A. P 6,500

B. P 8,600

C. P 5,500

D. P 7,500

C. P 5,500

21. A deposit of P 1,000 is made in a bank account that pays 8% interest compounded annually. Approximately how much money will be in the account after 10 years?

A. P 1,925.00

B. P 1,860.00

C. P 2,345.00

D. P 2,160.00

D. P 2,160.00

22. The amount of money paid for the airplane by customers *

A. Cost

B. Investment

C. Price

D. Profit

C. Price

23. A form of fixed-interest security issued by central or local government, companies, banks or other institutions. They are usually a form of long- term security, buy may be irredeemable, secured or unsecured.

A. Bonds

B. Certificate of deposit

C. T-bills

D. All of these

A. Bonds

24. What is the accumulated amount of five year annuity paying P 6,000 at the end of each year, with interest at 15% compounded annually?

A. P 40,454.29

B. P 41,114.29

C. P 41,454.29

D. P 40,544.29

A. P 40,454.29

25. A is a periodic payment and I is the interest rate, then present worth of a perpetuity =

A. Ai

B. Ain

C. An/i

D. A/i

D. A/i

26. A market situation where there is one seller and one buyer. *

A. Monopoly

B. Monopsony

C. Bilateral monopoly

D. Bilateral monopsony

C. Bilateral monopoly

27. A government bond which have an indefinite life rather than a specific maturity.

A. Coupon

B. Debenture

C. T-bill

D. Consol

D. Consol

28. ABC Corporation makes it a policy that for any new equipment purchased, the annual depreciation cost should not exceed 20% of the first cost at any time with no salvage value. Determine the length of service life necessary if the depreciation used is the SYD method.

A. 9 years

B. 10 years

C. 12 years

D. 19 years

A. 9 years

29. A man purchased on monthly installment a P 100,000 worth of land. The interest rate is 12% nominal and payable in 20 years. What is the monthly amortization?

A. P 1101.08

B. P 1,121.01

C. P 1,152.15

D. P 1,128.12

A. P 1101.08

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

A. Interest

B. All of the above

C. Investment

D. Interest rate

D. Interest rate

31. In SYD method, the sum of years digit is calculated using which formula with n = number of useful years of the equipment.

A. n(n-1)/2

B. n(n+1)/2

C. n(n+1)

D. n(n-1)

B. n(n+1)/2

32. The residual value of a company's assets after all outside liabilities (shareholders excluded) have been allowed for.

A. Par value

B. Return

C. Dividend

D. Equity

D. Equity

33. The ability to meet debts as they become due is known as *

A. insolvency

B. leverage

C. liquidity

D. solvency

D. solvency

34. A distinct legal entity which can practically transact any business transaction which a real person can do?

A. Partnership

B. Sole Proprietorship

C. Corporation

D. Enterprise

C. Corporation

35. These are certificates issued as evidence of ownership of a person in a corporation.

A. Bonds

B. Certificates of ownership

C. Share certificates

D. Stock certificates

D. Stock certificates