PLANT DESIGN

SOURCE QUESTION
MRII 1. This is the first step in plant and equipment design
2014 a) Feasibility study
b) Development of optimum economic design
c) Detailed engineering design
d) Costing
MRII 1. In a plant and equipment design, our role as chemical engineer are the following, except
2014 a) To design new plant and expansion lines
b) To modify existing lines and processes
c) To develop new technologies
d) To construct the plant and/ or equipment
MRII The following are parts of a feasibility study, except
2014 a) Market research
b) Technical feasibility
c) Financial statement
d) Economics
MRII A particular cost estimation for a particular product is enlisted below:
2014 Distribution and Marketing costs USD97,200
Direct Production costs USD 1,848,737.25
Fixed Charges USD 225,225.25
Plant Overhead Cost USD 575, 235.85
General Expenses USD 103,523.45
What is the total manufacturing cost?
a) USD 2,699,198.35
b) USD 2,699,148.35
c) USD 2,649,198.35
d) USD 2,649,198.85
MRII Based from the preceding problem, what is the Total Product Cost?
2014 a) USD 2,349,921.80
b) USD 2,849,921.80
c) USD 2,349,971.80
d) USD 2,899,921.80
MRII Based from the preceding problem, if the production rate is 20,625, what is the break even point selling price?
2014 a) USD 113.94
b) USD 138.18
c) USD 123.22
d) USD 140.60
MRII Based from the preceding problem, if the market price is USD 200, what is the break even point selling volume?
2014 a) 11,749.61
b) 14,249.61
c) 11,249.61
d) 14,499.61
MRII It describes the general sequence of materials, unit operations and processes involved, equipment and operating parameters
2014 a) qualitative flow diagram
b) quantitative flow diagram
c) combined – detailed flow diagram
d) detailed-estimate flow diagram
MRII 1. This is the most important part of a feasibility study in the eyes of an investor
2014 a) Market study c) Economic study
b) Technical study d) Financial study
MRII 2. Which is not included in the market study?
2014 a) present and future demands c) competition
b) buying habits d) location
Indian 1. The total capital investment for a chemical plant is USD1.5 million. Working capital is USD 180,000. The plant can produce
Reviewer 28205 lb of a product per day during a 360 days/yr operating time. The selling price ($/ton) of the product required to give
a turn over ratio of 1 is
a) 245 b) 250 c) 260 d) 275
SOL’N:
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑑𝑎𝑦𝑠 1 𝑡𝑜𝑛
= (28205 𝑙𝑏) 360
𝑦𝑒𝑎𝑟 𝑦𝑟 2000 𝑙𝑏𝑚
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑
= 5076.9 𝑡𝑜𝑛𝑠/𝑦𝑟
𝑦𝑒𝑎𝑟
 PLANT DESIGN

Fixed capital = Total capital – working capital

Fixed capital = $(1,500,000-180,000) = $1,320,000

𝑎𝑛𝑛𝑢𝑎𝑙 𝑠𝑎𝑙𝑒𝑠
𝑇𝑢𝑟𝑛 𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 = =1
𝑓𝑖𝑥𝑒𝑑 𝑐𝑎𝑝𝑖𝑡𝑎𝑙
Annual sales = Fixed capital = $1,320,000
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 $1,320,000 $259.9960
= =
𝑡𝑜𝑛 5077 𝑡𝑜𝑛𝑠 1 𝑡𝑜𝑛

Indian A newly installed piece of equipment has a value of Php50,000. Its useful life is estimated to be 10 years and its salvage value is
reviewer Php8,000. Depreciation will be charged as a cost by making equal yearly payments, first payment being made at the end of the
first year. The depreciation fund will be accumulated at an annual interest rate of 8¼ %. The yearly depreciation cost (Php) under
these conditions is
a) 2357 b) 2865 c) 3286 d) 4229

Money borrowed today is to be paid in 6 equal payments at the end of 6 quarters. If the interest is 12%
compounded quarterly. How much was initially borrowed if quarterly payment is Php2000.
a) Php10,200.56 b) Php10,382.90 c) Php10,586.99 d) Php10,834.38

2. The total capital investment for a chemical plant is $1.2 million. If the plant can produce an average of 7500 kg
of final product per day during a 365 day per year, what is the selling price in dollars per kilogram of the
product? Assuming working capital is 15 to 20% of the total capital investment.
a) $0.36 b) $1.00 c) $2.76 d) no answer
SOL’N:
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑘𝑔 𝑑𝑎𝑦𝑠 𝑘𝑔
= 7500 365 = 2,737,500
𝑦𝑒𝑎𝑟 𝑑𝑎𝑦 𝑦𝑟 𝑦𝑟
Fixed capital = Total capital - working capital
0.85 + 0.80
Fixed capital = $(1,200,000) = $990,000
2
Assume turnover ratio = 1
𝑎𝑛𝑛𝑢𝑎𝑙 𝑠𝑎𝑙𝑒𝑠
𝑇𝑢𝑟𝑛 𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 = =1
𝑓𝑖𝑥𝑒𝑑 𝑐𝑎𝑝𝑖𝑡𝑎𝑙
Annual sales = Fixed capital = $990,000
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 $990,000 $0.36
= =
𝑘𝑔 2,737,500 𝑘𝑔 1 𝑘𝑔

A 100 m3 tank costs $3040 in 2004. Estimate the current cost of a 300 m3 tank, if the exponent for a 300 m3 tank
is 0.9.
 PLANT DESIGN

1. A 100 m3 tank costs $3040 in 1992. Estimate the 2004 cost of a 300 m3 tank, if the exponent for a 300 m3 tank is 0.9.
a) $1350 b) $6852 c) $7009 d) $9745
.
300𝑚 1124.7
𝐶𝑜𝑠𝑡 300𝑚 𝑡𝑎𝑛𝑘 = $3040 = $9,744.55
100𝑚 943.1

A reactor A with a negligible scrap value costs P1.1 million and will have a useful life of 6 years. Another reactor B with equivalent
capacity is priced at P1.8 million but with a useful life of 10 years and a scrap value of P200,000. Assuming an effective compound
interest rate of 6 percent per year and that the replacement cost of each reactor is the same as that of the original reactor.
Which reactor will you choose?
 PLANT DESIGN

a) A b) B c) reactors are equivalent d) no answer

The cost of equipment is P500,000 and the cost of installation is P30,000. If the salvage value is 10% of the cost of
equipment at the end of 5 years, determine the book value at the end of the fourth year. Use straight line method.
A parent on the day the child is born wishes to determine what lump sum would have to be paid into an account
bearing interest of 5% compounded annually, in order to withdraw Php20,000 each on the child’s 18th, 19th, 20th and
21st birthdays. How much is the lump sum amount?
1. The initial cost of a machine is $20,000. Its salvage value after 10 years of useful life is $4000. Interest rate is 10% and
the annual maintenance cost is $1000. The annual cost ($) of the machine is most nearly.
a) 3004 b) 3618 c) 4004 d) 4506
SLU A 250 ft2 shell and tube heat exchanger was purchased for Php135,000 in 1989 when the index value was 830. Estimate the cost
of a 150 ft2 shell and tube heat exchanger in 2001 when the index value is 964 and the appropriate cost capacity factor is 0.6.
a) Php 115, 410
 PLANT DESIGN

SLU A solvent extraction operation is carried out continuously in a plate column with gravity flow. The unit is operated 24 h/day. A
feed rate of 1500 ft3/day must be handled 300 days per year. The allowable velocity per square foot of cross sectional tower
area is 40 ft3 of combined solvent and charge per hour. The annual fixed costs for the installation can be predicted from the
following equation:
𝐶 = 8800𝐹 − 51000𝐹 + 110,000
P/year, where Fsf is cubic feet of solvent per cubic foot of feed. Operating and other variable costs depend on the amount of
solvent that must be recovered, and these costs are Php 0.04 for each cubic foot of solvent passing through the tower. The tower
diameter that should be used for optimum conditions of minimum total cost per year is _________.
a) 2.4 ft
 PLANT DESIGN

SLU The design formulas below are used to find the allowable pressure of a thick-walled pressure vessel if the thickness, t is known:

𝑃 = 𝑆𝐸 with 𝑍 =
A seamless forging with an 8 ½” ID is 2.25” thick and is made of code material with an allowable stress of 17500 lbf/in2. The
allowable pressure for this cylinder is _________.
a) 7020 psi
 PLANT DESIGN

SLU A tank contains 50,000 kg of 20% oleum (20 kg SO3 dissolved in 80 kg of pure H2SO4). The kilograms of water that must be added
to the tank to give 93.2 weight percent sulfuric acid, commonlu called oil of vitriol is _________.
a) 6060 kg

SLU At a plant produces sulfuric acid by the contact process, a large storage tank currently holds 100,000 kg of 20% oleum. The tank
has a total capacity when filled of 130,000 kg. If water is added to the tank to fill it just to its capacity, the weight percent
sulfuric acid in the final mixture in the tank is ________.
a) 80.4%

SLU Water has the following composition expressed as mole percent:

CO = 42.9; CO2 = 3; H2 = 49.8; N2=3.3; O2=0.5; CH4=0.5
The net heating value for carbon monoxide equals 4347 Btu/lb, for hydrogen equals 52,010 Btu/lb and for methane equals 21,520
Btu/lb. The net heating value of the water gas expressed as Btu per cubic feet of dry gas at 600F and 1 atm pressure is ______.
 PLANT DESIGN

a) 279 Btu/ft3

SLU One metric ton of clay was used in the making of ceramic batch. If this represents 30% of the whole batch and the analysis of
the other raw materials in the batch is 35% feldspar and 35% quartz and efficiency of manufacture is 80%, the pieces of ceramic
products made weighing 0.091 kg each is _________.
a) 28,080
 PLANT DESIGN

SLU For thick spheres, a y factor is used to determine thickness, t, if P is known. The equations are:
/ ( )
𝑡=𝑅 𝑦 − 1 and 𝑦 =
Where: t=minimum required thickness of sphere (inch); R=inside diameter of sphere (inch); S=allowable stress (lbf/in2); E=joint
efficiency (%); P=allowable pressure. Assuming S=14,000 lbf/in2, P=3000 psi and E=100%, the thickness of a sphere with a 10 inch
inside diameter to be used with a 3000 psi allowable pressure is _______.
a) 9/16 inch

SLU Determine the allowable pressure for a vessel with the following original design details, but which now has a minimum thickness of
0.40 inch.
Corrosion allowance = 1/8 inch
Nominal thickness = 0.688 inch
Outside diameter = 24 inch
Carbon steel allowable stress = 15,000 psi
Design pressure = 500 psi
Longitudinal double welded butt joint with full radiography
An ellipsoidal head attached to each end of the shell with a single welded butt joint with a backing strip, and only spot-
radiographed. Use the formula below for a cylindrical shell to calculate the pressure for the longitudinal welded or seamless
joints. 𝑃= .
a) 510 psi

SLU Water is treated with an ion-exchange resin which must be regenerated. A large tank is available at no cost for storing softened
water to smooth any variations in demand and to supply water while the resin is being regenerated at negligible time. Demand
averages 2.3 m3/h for all the hours in a year. The time, t, in hours that the resin can be used before it must be regenerated is
given by: 𝑡 =
where V is the volume of the resin in m3 and F is the flow rate of the water in m3/h. Fixed costs are Php 9000/m3 for the resin
 PLANT DESIGN

and equipment for a 5-year economic life. Regeneration costs vary as the 0.8 power of the volume of the resin and are Php 55 for
a 1 m3 unit. The total cost for a 1000 m3 of softened water is ________.
a) Php430

SLU An evaporator’s scales and tests show that the steam condensed in the heating tubes varies with time according to the
relationship: S = A (50 – 0.05t), t<1000
where A is the condensation rate in kg.h, A is the heating area in m2 and t is the evaporating time in hours since the last clean –
out. There will be 0.9 kg of water evaporated per kg of steam condensed. The cost for the evaporators is Php2100/m2 heating
area and is written off over a 10 year period. The allocable labor cost is Php15/h of operation. Each cleaning costs Php2500. The
water to be evaporated per year is 4.5 x 106 kg and the operating time is not to exceed 6000 h/yr. The optimum heating area to
be installed is ________.
a) 113 m2
PLANT DESIGN
 PLANT DESIGN

SLU Lubricating oil is to be treated continuously in a tower using a selective solvent to remove naphthenic material. The parameter R is
defined as R = bbl solvent used/bbl oil treated and the treatment cost, without recovery of the solvent, in pesos per year is given
by 18,600 R2 – 111,000R + 217,000. It costs Php 0.40 to separate each barrel of solvent circulated through the tower and 300
bbl/day of oil will be processed for 320 days per year. The most economical value of R to be used in bbl solvent per bbl oil is ____.
a) 1.92

SLU A water solution of molasses contains 10% by weight sucrose (C12H22O11). The CO2 formed in the reaction can be considered as
having a negligible solubility. The weight percent of ethyl alcohol in the solution after 90% of the sucrose has been converted to
ethyl alcohol by fermentation and the last 10% of the sugar can be assumed unchanged is ___________.
a) 5.1%
 PLANT DESIGN

SLU For a two stage adiabatic compressor where the gas is cooled to the inlet gas temperature between stages, the theoretical work is
given by

𝑘𝑃 𝑉 𝑃 𝑃
𝑊= −2+
𝑘−1 𝑃 𝑃
where: k=Cp/Cv; P1= inlet pressure; P2=intermediate stage pressure; P3=outlet pressure; V1=inlet volume. If P1=1 atm and P3=4 atm,
the optimum intermediatepressure P2 so that the work is a minimum is _______.
a) 1 atm b) 2 atm c) 3 atm d) no answer

SLU A sphere with a 30 ft inside diameter stores gas at a maximum pressure of 75 psi at 1250F. The sphere is made of a low-alloy
steel plate, a double welded butt joint with full radiography are used and the material has a code-allowable stress of 17,500 psi.
The thickness of the spherical vessel with no corrosion allowance is _______.
a) ¼ inch b) ½ inch c) ¾ inch d) 1 inch
 PLANT DESIGN

SLU The thick cylinder equations below are used whenever the pressure exceeds 0.385SE or when the thickness of the cylindrical shell
exceeds half the radius:
1
𝑍= and 𝑡 = 𝑅 𝑍2 − 1
where: t=thickness, inch; R= inside radius (inch); S=allowable stress (psi); E = welded joint efficiency (%); P= allowable working
pressure (psi). A seamless cylinder with 10 inch inside diameter is made of SA-182 grade F321 stainless steel, to be operated at
10000F and 3000 psi. The allowable stress for this material is 14,000 psi at the designated temperature. Without corrosion
allowance, the thickness of the cylinder is _________.
a) 5/4 inches

SLU A large spherical tank contains gas at a pressure of 500 psi. The tank is 60 ft in diameter and is constructed of high tensile
strength steel having a yield stress in tension of 80 ksi. The minimum thickness of the wall of the tank if a factor of safety of 3.2
with respect to yielding is required is _________.
a) 375 inches
SLU A scuba tank is being designed for an internal pressure of 1800 psi with a factor of safety of 2.0 with respect to yielding. The
yield stress of the steel is 42,000 psi in tension and 20,000 psi in shear. If the diameter of the tank is 6 inches, the required wall
thickness is _______.
a) 0.27 inch
SLU Water is to be cooled by air in a certain type of forced draft cooling tower at a rate of 7,000 gph for 7400 hr/year. The height
of the transfer unit maybe considered constant at 15 ft and the number of transfer units varies approximately with the gas
 PLANT DESIGN

velocity as follows for a fixed water velocity of 600 lb/h-ft2 based on the empty tower and a fixed air inlet temperature.
2000
Number of transfer units =
G
where G is the air velocity in lb/h-ft2 based on the empty tower. If the cost of the tower installed is Php 0.8/ft3 for 8 years’
service and direct costs vary as 𝐶 = 6G x 10 , pesos/hour. The optimum mass velocity is _______.
a) 110.7 lb/hr-ft2

3. Machines that convert mechanical energy to electrical energy are

a) conductors b) motors c) generators d) engines
4. While making an estimate of the total product cost for a chemical plant, expenditure on research and development (R&D) is
a) Overhead cost c) Fixed expense
b) General expense d) Direct production cost
5. Its purpose is to minimize the number of people and/or machines on an assembly line that is required to produce a given number of units
a) Plant layout c) Ergonomics
b) Line balancing d) Bottleneck
6. It is used as the basis for bidding the Execution Phase Contracts and as the design basis.
a) Plant Design b) Feasibility Study c) FEED d) FEL
7. The layout not vulnerable to equipment failures
a) Process oriented c) Fixed position
b) Product oriented d) Static layout
8. To maintain the equality of the accounting equation, a decrease in asset may have resulted from :
a) Decrease in another asset c) Decrease in supplies
b) Increase in liability d) Decrease in capital
9. Hazard Class of nitrogen and carbon dioxide
a) Class 1 b) Class 2 c) Class 3 d) Class 4
10. Plant layout type where morale problems and repetitive stress injuries most likely occur
a) Fixed position c) Process oriented
b) Functional layout d) Product oriented
11. The Language of Business
a) Accounting c) Journal
b) Income Statement d) Balance Sheet
12. Type of capital cost estimate that is based on the knowledge of the major items of equipment.
a) Ratio Estimate c) Scope Estimate
b) Factored Estimate d) Detailed Estimate
13. Involves the allocation of space and arrangement of equipment in such a manner that overall operating costs are minimized
a) Plant layout c) Ergonomics
b) Line balancing d) Spacing
14. Its disadvantage is that the production period is very long and needs a large capital investment.
a) Static layout c) Functional Layout
b) Line Layout d) Combination Layout
15. Type of capital cost estimate that is based on complete engineering drawings and site survey
a) Ratio Estimate c) Scope Estimate
b) Study Estimate d) Detailed Estimate
16. In estimating total capital investment, legal expenses are part of the .
a) Working capital c) Total direct cost
b) Contingency cost d) Total indirect cost
17. Part of the MSDS where one finds the Manufacturer’s address and contact numbers.
a) Manufacturer’s Information c) Heading
b) Information on Ingredients d) Product Information
18. The percentage of time a production line is working
a) Production rate c) Utilization
b) Cycle time d) Efficiency
19. This type of business entity is in “buy and sell” business
a) Service c) Manufacturing
b) Merchandizing d) no answer
 PLANT DESIGN
20. A geographical boundary defining the coverage of a specified project.
a) Grass root limit c) Plant spacing
b) Battery limit d) Plant layout
21. Which financial statement is most useful in assessing the profitability of the business enterprise?
a) Statement of Change’s in Owner’s Equity
b) Income Statement
c) Balance Sheet
d) Trial Balance
22. Includes all engineering aspects involved in the development of new, modified or expanded commercial process in a chemical plant
a) Process Design c) Market Study
b) Plant Design d) Feasibility Study
23. The practice of designing products, systems or processes to properly account the interaction between them and the people that use them
a) Plant Design c) Ergonomics
b) Line balancing d) Safety
24. It is appropriate if the primary focus of the analysis of production lines is minimizing the number of workstations and the amount of tools
and equipment required.
a) Workstation Heuristics c) Incremental Heuristics
b) Longest Task Time Heuristic d) Cycle time Heuristics
25. Equipment cost estimate by cost indexing are fairly accurate if the original costs are less than 10 years
a) True b) False c) No answer d) a and b
26. The most popular form of business organization wherein shares of stock are issued to the person as an evidence of ownership of the
business
a) Partnership c) Corporation
b) Sole Proprietorship d) Cooperatives
27. A method wherein payment that is made, a portion of the payment is applied towards reducing the principal, and another portion of the
payment is applied towards paying the interest on the loan.
a) Pro-rated c) Depreciation
b) Annuity d) Amortization
28. It refers to a phenomenon where the performance or capacity of an entire system is limited by a single or small number of components or
resources.
a) Plant layout c) Ergonomics
b) Line balancing d) Bottleneck
29. Expenses incurred in the business not directly connected to the actual manufacturing or sale of goods are:
a) Commission c) Administrative costs
b) Overheads d) Marginal costs
30. The difference between the book value and the actual lower resale value is
a) sunk cost c) resale value
b) salvage value d) fixed cost
31. It is the actual or exact rate of interest on the principal during one year.
a) effective rate c) exact rate
b) nominal rate d) none of the above
32. A form of business or company ownership
a) Corporation c) Proprietorship
b) Partnership d) all of the above
33. An index of short paying ability is called
a) Current ratio c) Profit margin ratio
b) Acid test ratio d) Receivable ratio
34. Which of the following is not an entry in working capital
a) ROR b) POP c) discounted cash flow d) no answer
35. It is the difference between the present worth and the worth at some time in the future
a) discount b) interest c) mark-up d) no answer
36. A debit may signify
a) increase in liability account c) decrease in asset account
b) increase in capital account d) increase in asset account
 PLANT DESIGN
37. The series of equal payments against debt, which includes both principal and interest, made on regular intervals
a) Annual premium c) Amortization
b) Depreciation d) Annuity
38. Gross income less gross expense before deducting provision for income tax
a) Net income c) Gross profits
b) Gross proceeds d) Gross sales
39. Rental of land, building and equipment including insurance premium are considered as
a) incremental costs c) marginal costs
b) operating costs d) fixed costs
40. The amount of money required for the operation of a business including inventories
a) Cost of sales c) Fixed cost
b) Working capital d) Capital cost
41. The following cost item which in common both the fixed and operating cost of an enterprise is:
a) interest b) depreciation c) taxes d) supplies
42. The length of time, usually in years for the cumulative net annual profit to equal the investment is called:
a) receivable turnover c) return of investment
b) price earning ratio d) payback period
43. The reduction in value and marketability due to competition from newest products / model
a. depreciated cost c. fixed cost
b. indirect cost d. obsolescence
44. Form of summary of assets, liabilities and net worth
a. production c. break even point
b. balance sheet d. balance method
45. Is the simplest form of business organization
a. sole proprietorship c. enterprise
b. partnership d. corporation
46. The worth of property which is equal to the original cost less depreciation.
a. earning value c. scrap value
b. book value d. face value
47. The type of interest that is periodically added to the amount of loan so that subsequent interest is based on the cumulative amount.
a. compound interest c. simple interest
b. interest rate d. sinking fund
48. Output or sales at which income is insufficient to equal operating cost
a. break even point c. investment
b. depreciation d. cash flow
49. The price at which a given product will be supplied and purchased is the price that will result in the supply and the demand being equal.
a. law of demand and supply c. law of diminishing returns
b. present worth method d. obsolescence
50. An estimate of an assets' net market value at the end of its estimated life.
a. break even point c. cash flow
b. interest d. book value
51. An estimate of an assets' net market value at the end if its estimated life.
a. book value c. salvage value
b. depreciation d. cash flow
52. A lessening of the value of an asset due to a decrease in the quantity available as a coal, oil and timber in forests.
a. depletion c. depreciation
b. amortization d. investment
53. A certificate of indebtedness of a corporation usually for a period of net loss that ten years and guaranteed by a mortgage on certain
assets of the corporation or its subsidiaries.
a. appraisal c. bond
b. written contract d. equity capital
54. Funds supplied and used by owners of an enterprise in the expectation that profit will be earned.
a. equity capital c. investment
b. working capital d. present
55. Funds supplied by others on which a fixed rate of interest must be paid and the debt be repaid at a specific place and time
a. discount c. cash flow
 PLANT DESIGN
b. working capital d. borrowed capital
56. The quantity of a certain commodity that is offered for sale at a certain price at a given place and time
a. supply c. demand
b. discount d. investment
57. A condition where only few individuals produce a certain product that action of one will lead to almost the same action by the other.
a. monopoly c. oligopoly
b. semi monopoly d. perfect competition
58. A distinct legal entity which can practically transact any business transaction which a real person could do.
a. sole proprietorship c. enterprise
b. partnership d. corporation
59. An increase in the value of capital asset is called
a. profit c. capital gain
b. capital expenditure d. capital stock
60. A currency traded in a foreign exchange market for which the demand is consistently high in relation to its supply
a. money market c. treasury bill
b. hard currency d. certificate of deposit
61. Defined as the certificate of indebtedness of a corporation usually for a period not less than 10 years and guaranteed by a mortgage on
certain assets of a corporation
a. bonds b. T-bills c. stock d. all of these
62. It is a negotiable claim issued by a bank in lieu of a term deposit
a. time deposit c. bond
b. capital gain d. certificate of deposit
63. The amount of a company's profit that the board of directors of the corporation decides to distribute to ordinary shareholders
a. dividend b. return c. share stock d. par value
64. The value which is usually determined by the disinterested third party in order to establish a price that is fair to both seller and buyer.
a. fair value c. market value
b. salvage value d. book value
65. The price that can be obtained from the sale of property or second hand
a. book value c. salvage value
b. fair value d. market value
66. The process of determining the value of certain property for specific reasons
a. amortization c. investment
b. appraisal d. depreciation
67. A bond whereby the security behind it are the equipments of the issuing corporation
a. debenture bond c. lien bond
b. collateral bond d. mortgage bond
68. An annuity where the payment period extends forever or in which the periodic payment continue indefinitely.
a. ordinary annuity c. deferred annuity
b. annuity due d. perpetuity
69. It is the span of life of an equipment during which it produces the product it is designed to produce at a profit
a. write off period c. physical life
b. economic life d. perpetual life
70. It is a depreciation method whereby the decrease in value of the unit is constant each year
a. Matheson formula c. Straight line method
b. SYD method d. Sinking fund method
71. These are costs which remain relatively constant regardless of any change in operation or policy which is made.
a. fixed cost c. increment cost
b. variable cost d. differential cost
72. The length of time at which the original cost of capital used to purchase a unit have already been recovered.
a. economic life c. write off period
b. physical life d. salvage life
73. The actual interest earned by a given principal is known as:
a. compound interest c. nominal interest
b. simple interest d. effective interest
74. The exclusive right of a company to provide a specific product / services in a given region of the country.
a. franchise b. branch c. extension d. outlet
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75. It occurs when a commodity or service is supplied by a number of vendors and there is nothing to prevent additional vendors entering the
market
a. free market c. open market
b. perfect competition d. law of supply and demand
76. In making economy studies, a minimum required profit on the invested capital is included as a cost.
a. rate of return c. annual cost pattern
b. present worth pattern d. capital cost
77. Depreciation method where the value of an asset decreases at a decreasing rate.
a. SYD method c. sinking fund
b. straight line method d. declining balance
78. Cost of things that are neither labor nor materials
a. construction cost c. expenses
b. labor cost d. investment
79. Kind of obligation which has no condition attached
a. analytic b. gratuitous c. private d. pure
80. Gross, profit, sales less cost of goods sold as a percentage of sale is called
a. profit margin c. gross margin
b. ROI (rate of return) d. price earnings
81. The series of equal payments at equal intervals of time
a. annuity c. interest
b. depreciation d. amortization
82. A legally binding agreement on promise to exchange goods or services
a. contract b. barter c. memorandum d. pro-forma
83. Used to produce consumer goods
a. producer goods c. supply
b. consumer goods d. cash flow
84. It is a series of equal payments occurring at equal interval of time where the first payment is made several periods after the beginning of
the payment
a. deferred annuity c. delayed annuity
b. progressive annuity d. simple annuity
85. A market whereby there is only one buyer of an item for which there are no goods substitute
a. monopoly b. monopsony c. oligopoly d. oligopsony
86. The amount of a property in which a willing buyer will pay to a willing seller for the property when neither one is under the compulsion to
buy or sell
a. fair value c. goodwill value
b. book value d. market value
87. A type of annuity where the payments are made at the start of each period, beginning from the first period
a. ordinary annuity c. annuity due
b. deferred annuity d. perpetuity
88. 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
a. straight line c. sinking fund method
b. SYD method d. declining balance method
89. The cumulative effect of elapsed time on the money value of an event based on the earning power of equivalent invested funds capital
should or will earn
a. present worth factor c. interest rate
b. time value of money d. yield
90. Double taxation is a disadvantage of which business organization?
a. sole proprietorship c. partnership
b. corporation d. enterprise
91. The function of interest rate and time that determines the cumulative amount of a sinking fund resulting from specific periodic deposits
a. sinking fund factor c. present worth factor
b. capacity factor d. demand factor
92. The intangible item of value from the exclusive right of the company to provide a specific product or service in a stated region of the
country
a. market value c. book value
b. goodwill value d. franchise value
93. The length of time during which it is capable of performing the function for which it was designed and manufactured.
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a. economic life c. business life
b. insular life d. physical life
94. Products that are directly used by people to satisfy their wants.
a. supply c. consumer goods
b. producer goods d. cash flows
95. A change in cost for a small change in volume of production.
a. fixed cost c. sunk cost
b. first cost d. differential cost
96. It occurs when a unique product or service is available only from a single supplier and entry of all other possible suppliers presented.
a. competition b. inventory c. monopoly d. profitability
97. The first cost of any property includes
a) the original purchase price and freight and transportation charges
b) installation expenses
c) initial taxes and permits' fee
d) all of the above
98. How much would you need to deposit at 6% in order to be able to withdraw Pnp358400 at the end of each year for 7 years?
a) No ans c) Php 200,000
b) Php 225,000 d) Php 250,000
99. What is the compound amount of Php 20,000 for 10 years plus Php 15,000 for 8 years plus Php 1000 for 6 years with interest at 8%
a) Php 68,810 c) Php 86,810
b) Php 72,527 d) none of these
100. Three manufacturers of plastic pipes are competing for market position. Company A is selling its product at less 35% and 5% (less
35%/5%); Company B at less 40% and Company C at less 30% and 10% (less 30%/10%). Assuming that the price list of these three
manufacturers are the same for all products, who is selling at the lowest level?
a) A b) B c) C d) all are equivalent
101. The purchase of a motor for $6000 and a generator for $4000 will allow a company to produce its own energy. The configuration can be
assembled for $500. The service will operate for 1600 hours per year for 10 years. The maintenance cost is $300 per year and the cost
to operate is $0.85 per hour for fuel and related costs. Using straight line depreciation, what is the annual cost for the operation?
There is $400 in salvage value for the system at the end of 10 years.
a) $2480 b) $2670 c) $2710 d) $3480

102. Tops Corporation’s gross margin is 45% of sales. Operating expenses such as sales and administration are 15% of sales. Tops is in a 40%
tax bracket. What percent of sales is their profit after taxes?
a) 5% b) 18% c) 24% d) 30%
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103. An electric replacement pump is being considered for purchase. It is capable of providing 200 hp. The pertinent data are as follows: cost
= $3200, electric efficiency = 0.85, maintenance cost per year = $50 and life expectancy is 14 years. The pump is used for 400 hours per
year and the cost of electricity is $0.04 per kW-h. Assuming the pump will have no salvage value and using straight line depreciation,
what will be the monthly cost?
a) $238.20 b) $667.60 c) $234.60 d) $647.60