initial cost.
book value at the end of (n – 1)th year,
depreciation during the (n – 1)th year.
difference between initial cost and salvage value.
✅ The correct answer is option B.
Plant Economics MCQs
33. The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of __________ percent.
0.1 to 1
1 to 2
10 to 20
50 to 60
✅ The correct answer is option C.
34. Purchased cost of equipments for a chemical process plant ranges from __________ percent of the fixed capital investment.
10 to 20
20 to 40
45 to 60
65 to 75
✅ The correct answer is option B.
35. Payback period
and economic life of a project are the same.
is the length of time over which the earnings on a project equals the investment.
is affected by the variation in earnings after the recovery of the investment.
all (a), (b) and (c).
✅ The correct answer is option B.
36. Construction expenses are roughly __________ percent of the total direct cost of the plant.
2
10
30
50
✅ The correct answer is option B.
37. For a typical project, the cumulative cash flow is zero at the
end of the project life.
break even point.
start up.
end of the design stage.
✅ The correct answer is option B.
38. __________ method for profitability evaluation of a project does not account for investment cost due to land.
Net present worth
Pay out period
Discounted cash flow
Rate of return on investment
✅ The correct answer is option B.
39. An investment of Rs. 100 lakhs is to be made for construction of a plant, which will take two years to start production. The annual profit from the operation of the plant is Rs. 20 lakhs. What will be the pay back time ?
5 years
7 years
12 years
10 years
✅ The correct answer is option B.
40. A machine has an initial value of Rs. 5000, service life of 5 years and final salvage value of Rs. 1000. The annual depreciation cost by straight line method is Rs.
300
600
800
1000
✅ The correct answer is option C.