# Practice Test: Question Set - 07

**1. __________ method for profitability evaluation of a project does not account for investment cost due to land.**

- (A) Net present worth

- (B) Pay out period

- (C) Discounted cash flow

- (D) Rate of return on investment

**2. Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method?**

- (A) Multiple straight line method

- (B) Sinking fund method

- (C) Declining balance method

- (D) Sum of the years digit method

**3. Which of the following is the costliest material of construction used in pressure vessel construction?**

- (A) Low alloy steel

- (B) Lead

- (C) Titanium

- (D) High alloy steel

**4. A present sum of Rs. 100 at the end of one year, with half yearly rate of interest at 10%, will be Rs.**

- (A) 121

- (B) 110

- (C) 97

- (D) 91

**5. Annual depreciation costs are constant, when the __________ method of depreciation calculation is used.**

- (A) Declining balance

- (B) Straight line

- (C) Sum of the years digit

- (D) None of these

**6. The 'total capital investment' for a chemical process plant comprises of the fixed capital investment and the**

- (A) Overhead cost

- (B) Working capital

- (C) Indirect production cost

- (D) Direct production cost

**7. Annual depreciation cost are not constant when, the __________ method of depreciation calculation is used.**

- (A) Straight line

- (B) Sinking fund

- (C) Present worth

- (D) Declining balance

**8. An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be**

- (A) 1000 (1 + 0.1/4)

^{20}

- (B) 1000 (1 + 0.1)

^{20}

- (C) 1000 (1 + 0.1/4)

^{5}

- (D) 1000 (1 + 0.1/2)

^{5}

**9. The total investment in a project is Rs. 10 lakhs and the annual profit is 1.5 lakhs. If the project life is 10 years, then the simple rate of return on investment is**

- (A) 15%

- (B) 10%

- (C) 1.5%

- (D) 150%

**10. Pick out the wrong statement.**

- (A) Gross margin = net income - net expenditure

- (B) Net sales realisation (NSR) = Gross sales - selling expenses

- (C) At breakeven point, NSR is more than the total production cost

- (D) Net profit = Gross margin - depreciation - interest

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