Engineering Economy Questions and Answers – Set 04


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Q1. Which one of the following is included in financial ratios of the firm?

(A) Profitability ratio
(B) Liquidity ratio
(C) Turnover ratio
(D) All of these


Q2. The annuity which refers to a debt payment for recovering the initial amount or capital in equal periodical payments, is known as;

(A) Present Worth Annuity
(B) Sinking fund annuity
(C) Compound annuity
(D) Capital recovery annuity


Q3. The financial analysis:

(A) Helps a share holder to compare the expected return on his investment in the firm against the expected return from other alternative investment
(B) Helps a bank to know the financial position of the firm for granting a loan to the firm
(C) Helps to judge the success of the firm’s financial plans
(D) All of these


Q4. Each financial ratio is generally compared by

(A) A past ratio calculated from the past financial standard of the firm
(B) A ratio developed by using the projected financial statement of the firm
(C) A ratio of some selected firms most progressive and successful at the point of consideration
(D) All of these


Q5. Pick up the correct statement from the following:

(A) The ability of a company to meet obligations which are likely to mature in short term, is called liquidity
(B) The liquidity ratio may be defined as a relationship of current liabilities and current assets and advances
(C) The liquidity ratios are used to indicate the financial position of the firm
(D) All of these


Q6. The owner of the construction company makes use of the estimate:

(A) To determine the capital investment costs
(B) To assist in financial arrangements
(C) To determine economic feasibility of the project
(D) All of these


Q7. Mr. David deposits Rs 1200 now, Rs 800 two years from now and Rs 1000 five years from now. If the savings bank’s rate of interest in 5%, he will receive an amount of Rs X, 10 years from now, where ‘X’ is

(A) Rs. 3415
(B) Rs. 4225
(C) Rs. 4413
(D) Rs. 4826


Q8. Pick up the correct statement from the following:

(A) Ratio analysis is the procedure of determining and interpreting numerical relationship of various items of the financial statement
(B) All financial ratios are obtained by relating two sets of information contained in a Single financial statement
(C) The relationship between two accounting figures expressed mathematically, is known as a financial ratio
(D) All of these


Q9. Pick up the correct statement from the following:

(A) The receipts and disbursements in a given time interval are referred to as cash flow
(B) The assumptions that all cash flows occur at the end of the interest period, is known as the end of period convention
(C) The cash flow diagram represents the statement of the problem and also includes what is given and what is to be found
(D) All of the above


Q10. Annuities involve:

(A) A series of payments
(B) All payments of equal amount
(C) Payment at equal time intervals
(D) All of these


Q11. A project construction cost estimate includes:

(A) The labour and material cost
(B) The equipment and over head cost
(C) The profit of the contractor
(D) All of these


Q12. Present worth Annuity (PWA) is generally known as

(A) Premium annuities
(B) Income annuities
(C) Future annuities
(D) All of these


Q13. Pick up the correct statement from the following:

(A) The capital required to get a project started, is called first cost
(B) The costs associated with a new or existing project that remain unaffected by the changes in activity level over the normal range of operation of the project, are called fixed costs
(C) The group of costs that vary proportionately to the changes in the activity level of a new or existing project are called variable costs
(D) All of these


Engineering Economy MCQs all set-

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