1.

The factor, which is largely considered in making or buying decisions, is

A. quality of suppliers
B. dependability of suppliers
C. production irrelevancy
D. both a and b
2. The difference that exists between total revenues, can be earned from two different
alternatives is termed as
A. independent revenue
B. incremental revenue
C. differential revenue
D. dependent revenue
3. The decisions made by company, which products to manufacture and buy and in what
quantities, of many product lines are called
A. incremental decisions
B. outsource decisions
C. product mix decisions
D. in-source decisions
4. Buying of goods or services from suppliers or vendors of some other country instead of local
supplier is classified as
A. outsourcing
B. insourcing
C. idle sourcing
D. sunk sourcing
5. A supermarket is considering running a promotion on one of its washing powder brands. By
doing this, it will not be able to run a campaign on its shampoo brands, which would have
generated a contribution of 50,000. What type of cost is this 50,000?
A. Marginal
B. Direct
C. Activity
D. Opportunity
6. Overhead refers to:
 A. Direct or Prime Cost
B. All Indirect costs
C. only Factory indirect costs
D. Only indirect expenses
7. A catering business has to make decisions about which sandwiches to make itself and which
to buy-in from third party suppliers. The transport costs are a fixed charge if it makes the
sandwiches itself. Which sandwiches should it make?

 
A. Cheese and jam
B. Ham only
C. Ham, cheese, jam
D. Ham and cheese
8. The cost reduction technique in comparison to the worth of a product is known as
(A) Reverse engineering
(B) Value engineering
(C) Material engineering
(D) Quality engineering
9. Value analysis examines the
(A) Design of every component
(B) Method of manufacturing
 (C) Material used
(D) All of the above
 10. Value analysis is normally applied to
(A) New products
(B) Old products
(C) Future products
(D) Both (A) and (B)
 11. Value can be defined as the combination of _______ which ensures the ultimate economy
and satisfaction of the customer.
(A) Efficiency, quality, service and price
(B) Efficiency, quality, service and size
(C) Economy, quality, service and price
(D) Efficiency, material, service and price
12.  Value analysis is a ____ process
(A) Remedial
(B) Preventive
(C) Continuous
(D) None of the above
 13. Value analysis should be applied when the following symptom(s) is (are) present
(A) Rate of return on investment is reducing
(B) Reduction in sales of the product
(C) Firm is unable to meet delivery promises
(D) All of the above
 14. Important reason(s) for arising unnecessary costs are
A. Poor design of product
B. Too tight specifications
C. Lack of standardization
D. All of the above
15. Money has time value because:
A. Money today is more certain than money tomorrow
B. Money today is worth more than money tomorrow in terms of purchasing power.
 C. There is a possibility of earning risk free return on money invested today.
D. All of the above.
16. Time value of money indicates that
A. A unit of money obtained today is worth more than a unit of money obtained in
future
B. A unit of money obtained today is worth less than a unit of money obtained in future
C. There is no difference in the value of money obtained today and tomorrow
D. None of the above
17. The relation between effective rate of interest (re) and nominal rate of interest (r) is best
represented by;
A. re = (1 + r/m)mn - 1
B. re = (1 + rm)m - 1
C. re = (1 + r/m)m - 1
D. None of the above
18. The annuity which refers to a debt payment for recovering the initial amount or capital in
equal periodic payments, is known as ;
A. Present Worth Annuity
B. Sinking fund annuity
C. Compound annuity
D. Capital recovery annuity
20. Pick up the correct statement from the following:
A. An annuity is a serious of equal payments occurring at equal period of time.
B. Annuity is called an equal payment or uniform payment series.
C. An annuity may have periods of time of any length but should always be of equal length.
D. All of the above.
21. Annuities involve
A. a series of payments
B. all payments of equal amount
C. payment at equal time intervals
D. All of the above
22. In a cash-flow diagram :
 A. Time 0 is considered to be the present
B. Time 1 is considered to be the end of time period 1.
C. A vertical arrow pointing up indicates a positive cash flow
D. All of the above
23. A person took a loan for Rs 100,000 for 10 years at 11% compound interest. The person
desires to pay off the amount in 10 equal annual instalments. The amount of each instalment is:
A. Rs 5638
B. Rs 6638
C. Rs 7738
D. None of these
24. Use interest tables. At what annual compound interest rate is $100 today equivalent to $370,
seventeen years from now?
A. i = 6%
B. i = 7%
C. i = 8%
D. i = 9%
25. Suppose that 1,000 is invested for six years at an interest rate of 10% per year, compounded
annually. How much will be in the account at the end of six years?
A. F = 1,000 + 600 = 1,600
B. F = 1,000 (1.06)10 = 1,791
C. F = 1,000 (1.10) 6 = 1,772
D. F = 1,000 (1.06) -10 = 558
26. An investor wishes to deposit an amount now so that in 30 years 1,000,000 will be in an
account that pays 10% interest per year, compounded annually. What amount must be deposited
now?
A. P = 1,000,000 (1.10) -30 = 57,309
B. P = 1,000,000 / 30 = 33,333
C. P = 1,000,000 (0.10) = 100,000
D. P = 1,000,000 (1.10) 30 = 17,449,402
27. 100 is invested for five years at an interest rate of 8% per year, compounded annually. How
much will be in the account at the end of five years?
 A. F = 100 (P/F,8%,5) = 100 (0.6806) = 68.06
B. F = 100 (F/P,8%,5) = 100 (1.469) = 146.90
C. P = 100 (P/A,8%,5) = 100 (3.993) = 399.30
D. F = 100 (F/A,8%,5) = 100 (5.867) = 586.70
28. An investor wishes to deposit an amount now so that in 20 years there will be 50,000 in an
account that pays 7% interest, compounded annually. What amount must be deposited now?
A. F = 50,000 (F/P,7%,20) = 50,000 (3.870) = 193,500
B. P = 50,000 (P/F,20%,7) = 50,000 (0.2791) = 13,955
C. P = 50,000 (P/F,7%,20) = 50,000 (0.2584) = 12,920
D. P = 50,000 (F/P,7%,20) = 50,000 (0.2415) = 12,075
29. The accumulated series of deposits as future sum of money is classified as
A. marginal fund
B. nominal fund
C. sinking fund
D. annuity fund
30. The assumption in calculating annuity is that every payment is
A. equal
B. different
C. nominal
D. marginal
31. The formula used for annuity A as R[(1+i)n -1] ⁄ i(1+i)n used to calculate
A. future value of annuity
B. nominal value of annuity
C. sinking value of annuity
D. present value of annuity
32. The interest rate used in the present value calculation is often referred to as?
(a) Discount rate
(b) Inflation rate
(c) Nominal rate
(d) None of the given option
33. In 2 years you are to receive $10,000. If the interest rate were to suddenly decrease, the
present value of that future amount to you would?
(a) The correct answer cannot be determined without more information
(b) Rise
(c) Fall
(d) Remain unchanged
34. An 8-year annuity due has a present value of $1,000. If the interest rate is 5 percent, the
amount of each annuity payment is closest to which of the following?
(a) $104.72
(b) $147.36
(c) $109.39
(d) $154.73
35. Suppose you wish to set aside Rs. 2,000 at the end of each of the next 10 years in an account
paying 12 percent compounded annually. You accumulate at the end of 10 years an amount
closest to?
(a) Rs. 22,456
(b) Rs. 35,098
(c) Rs. 28,324
(d) Rs. 20,324
36. How much will Rs. 10,000 grow into in 5 years if you earn 10%?
(a) Rs. 13,102
(b) Rs. 16,105
(c) Rs. 16,289
(d) None
37. In a cash flow series :
A. uniform gradient signifies that an income or disbursement changes by the same amount in
each interest period.
B. Either an increase or a decrease in the amount of a cash flow is called the gradient.
C. The gradient in the cash flow may be positive or negative.
D. All of the above
38. If the effective rate of interest compounded quarterly is 16%, then the nominal rate of interest
is:
A. 14.6%
B. 15%
C. 14.8%
D. 15.12%
39. If a loan of Rs. 30,000 is to be paid in 5 annual installments with interest rate of 12% p.a.
then the equal annual installment will be;
A. Rs. 7400
B. Rs. 8100
C. Rs. 7812
D. Rs. 8322
40. A loan of 5,000 is made for a period of 15 months, at a simple interest rate of 15%, what
future amount is due at the end of the loan period?
A. 5,937.50
B. 5,873.20
C. 5,712.40
D. 5,690.12
41. Miss Calledo deposited 1,000 1,500 and 2,000 at the end of the 2nd year, 3rd year and 4th
year, respectively in a savings account which earned 10% per annum. How much is in the
account at the end of the 4th year?
A. 4,880.00
B. 4,820.00
C. 4,860.00
D. 4,840.00
42. Suppose that $30,000 is borrowed today at 12% interest. The loan is to be repaid by uniform
annual payments for 5 years, beginning 1 year from now. Calculate the annual payment.
A. A = P / n = $30,000 / 60 years = $500 per year
B. A = P (A/P,12%,5) = $30,000 (0.2774) = $8,322 per year
C. P = A (P/A,12%,5) = $30,000 ($3.6048)= $108,140 per year
D. A = P (A/P,12%,60) = $30,000 (0.1201) = $3603.00 per
43. What single payment now is equivalent to a uniform series of $1000 per year for 20 years,
beginning 6 years from now? Interest is 12%.
A. P = A (P/A,12%,20) = $1000 (7.469) = $7,469
B. P = A (P/A,12%,20) (P/F,12%,6) = $1000 (7.469) (0.5066) = $3,784
C. P = A (P/A,12%,20) (P/F,12%,5) = $1000 (7.469) (0.5674) = $4,238
D. P = A (P/A,12%,20) (F/P,12%,5) = $1000 (7.469) (1.762) = $13,160
44. In a cash-flow diagram :
A. Time 0 is considered to be the present & Time 1 is considered to be the end of time period
1
B. A vertical arrow pointing up indicates a positive cash flow an
C. An arrow pointing downward indicates a negative cash flow
D. All of these
45. Formula for Uniform series compound amount factor
A. [(1+i)n – 1 / i]
B. [(1+i)n – 1 / i(1+i)n]
C.[ i / (1+i)n – 1]
D. [ i / 1 - (1+i)n]
46. Formula for Uniform series present worth factor
A. [(1+i)n – 1 / i]
B. [(1+i)n – 1 / i(1+i)n]
C.[ i / (1+i)n – 1]
D. [ i / 1 - (1+i)n]
47. Formula for Sinking fund factor
A. [(1+i)n – 1 / i]
B. [(1+i)n – 1 / i(1+i)n]
C.[ i / (1+i)n – 1]
D. [ i / 1 - (1+i)n]
48. Formula for Capital recovery factor
A. [(1+i)n – 1 / i]
B. [(1+i)n – 1 / i(1+i)n]
C. [ i / (1+i)n – 1]
 D. [ i / 1 - (1+i)n]
49. In the cash flow diagram shown in the given figure

A. The first disbursement occurs at the end of year 2

B. The second disbursement occurs at the end of year 4
C. The first receipt occurs at the end of year 1& second receipt occurs at the end of
year 3
D. All of these
50.

Find the annual equivalent (A series) of a gradient series

A. A = 100 - 10 (A/G, 10%, 4)
B. A = 100 + 10 (A/G, 10%, 4)
C. A = 100 - 10 (A/P, 10%, 4)
D. A = 100 - 10 (A/F, 10%, 4)