Plant Economics MCQs Archives

31. The depreciation during the year ‘n’, in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage ‘N’ to the

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.

32. According to six-tenths-factor rule, if the cost of a given unit at one capacity is known, then the cost of similar unit with ” times the capacity of the first unit is approximately equal to __________ times the cost of the initial unit.

n0.6

n0.4

✅ The correct answer is option B.

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.

✅ 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.