Multiple Choice Questions

1. The concept that different sums of money at different points in time can be said to be equal to each other is known as:

(a) Evaluation criterion

(b) Equivalence

(c) Cash flow

(d) Intangible factors

2. The evaluation criterion that is usually used in an economic analysis is:

(a) Time to completion

(b) Technical feasibility

(c) Sustainability

(d) Financial units (dollars or other currency)

3. All of the following are examples of cash outflows, except:

(a) Asset salvage value

(b) Income taxes

(c) Operating cost of asset

(d) First cost of asset

4. In most engineering economy studies, the best alternative is the one that:

(a) Will last the longest time

(b) Is most politically correct

(c) Is easiest to implement

(d) Has the lowest cost

5. At an interest rate of 10% per year, the equivalent amount of $10,000 one year ago is closest to:

(a) $8264

(b) $9091

(c) $11,000

(d) $12,000

6. Assume that you and your best friend each have$1000 to invest. You invest your money in a fund that pays 10% per year compound interest. Your friend invests her money at a bank that pays 10% per year simple interest. At the end of 1 year, the difference in the total amount for each of you is:

(a) You have $10 more than she does

(b) You have $100 more than she does

(c) You both have the same amount of money

(d) She has $10 more than you do

7. All of the following are examples of equity financing, except:

(a) Mortgage

(b) Money from savings

(c) Cash on hand

(d) Retained earnings