Plant-Economics Quiz 2

1 / 40

With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project ?

Remain constant

Decreases

Increases

Increases linearly

2 / 40

Scheduling provides information about the__________?

Time of completion of job

Proper utilisation of machines

Time of starting of job and also about how much work should be completed during a particular period

Means to minimise idle time for machines

3 / 40

Which of the following is not a component of depreciation cost ?

Loss due to decrease in the demand of product

Loss due to accident/breakdown in the machinery

Loss due to obsolescence of the equipment

Repairs and maintenance cost

4 / 40

Personnel working in the market research group is responsible for the job of___________?

Cost estimation

Product evaluation

Equipment selection

Equipment design

5 / 40

Relative cost of chemical process plants in India is about _______ percent more than the similar plants in U.S.A ?

6 / 40

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 ?

50 to 60

10 to 20

0.1 to 1

1 to 2

7 / 40

Which of the following is not a current asset of a chemical company ?

None of these

Inventories

Marketable securities

Chemical equipments

8 / 40

Pick out the wrong statement ?

Insurance rates on annual basis in a chemical plant may be about 1% of the fixed capital investment

The annual depreciation rate for machinery and equipments in a chemical process plant is about 10% of the fixed capital investment

In a chemical industry, research and development cost amounts to about 15% of net sales realisation (NSR)

Annual depreciation rate of buildings in a chemical plant is about 3% of its initial cost

9 / 40

The economic life of a large chemical process plant as compared to a small chemical plant is________?

Only slightly more

Slightly less

Much more

Almost equal

10 / 40

Purchased cost of equipments for a chemical process plant ranges from ______ percent of the fixed capital investment?

20 to 40

10 to 20

65 to 75

45 to 60

11 / 40

The total investment in a project is Rs. 10 lakhs and the annual profit is 1.5 lakhs. If the project life is 10 years, then the simple rate of return on investment is___________?

10%

15%

1.50%

150%

12 / 40

Which of the following is not a component of the fixed capital for a chemical plant facility ?

Emergency facilities

Utilities plants

Process equipment

Raw materials inventory

13 / 40

Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method ?

Declining balance method

Sum of the years digit method

Sinking fund method

Multiple straight line method

14 / 40

Pick out the wrong statement?

Net profit = Gross margin ? depreciation ? interest

At breakeven point, NSR is more than the total production cost

Net sales realisation (NSR) = Gross sales ? selling expenses

Gross margin = net income ? net expenditure

15 / 40

Which of the following is not a component of the working capital for a chemical process plant ?

Product inventory

Minimum cash reserve

In-process inventory

Storage facilities

16 / 40

Which of the following does not come under the sales expenses for a product of a chemical plant ?

Warehousing

Advertising

Customer service

Legal fees

17 / 40

Out of the following, the depreciation calculated by the ______ method is the maximum?

Diminishing balance

Straight line

Sum of the years digit

Sinking fund

18 / 40

The ratio of gross annual sales to the fixed capital investment is termed as the _________ ratio?

Cash reserve

Capital

Turnover

Investment

19 / 40

Optimum economic pipe diameter for fluid is determined by the_____?

Viscosity of the fluid

Total cost considerations (pumping cost plus fixed cost of the pipe)

Density of the fluid

None of these

20 / 40

The ?total capital investment? for a chemical process plant comprises of the fixed capital investment and the__________?

Working capital

Direct production cost

Overhead cost

Indirect production cost

21 / 40

Pick out the wrong statement ?

Net revenue is the total profit remaining after deducting all costs excluding taxes

Gross revenue is that total amount of capital received as a result of the sale of goods or service

The ratio of immediately available cash to the total current liabilities is known as the cash ratio

Consolidated income statement based on a given time period indicates surplus capital and shows the relationship among total income, costs & profit over the time interval

22 / 40

The amount of simple interest during ?n? interest period is (where, i = interest rate based on the length of one interest period, p = principal) ?

p(1 + i)n

p(1 ? i.n)

p.i.n.

p(1 + i.n)

23 / 40

Pick out the correct statement ?

Scrap value is the net amount of money obtainable from the sale of used property over and above any charges involved in its removal & sale

Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment

Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date

Difference between income and expense is termed as gross revenue

24 / 40

Optimum number of effects in a multiple effect evaporator is decided by the______?

Cost benefit analysis

Evaporation capacity required

Terminal parameters

Floor area availability

25 / 40

Utilities cost in the operation of chemical process plant comes under the ?

Fixed charges

General expenses

Direct production cost

Plant overhead cost

26 / 40

The _______ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities ?

Current ratio

Cash ratio

Net working capital

Liquids assets

27 / 40

Which of the following is the costliest material of construction used in pressure vessel construction ?

Titanium

High alloy steel

Low alloy steel

Lead

28 / 40

The inventory of raw materials included in the working capital is usually about _______ month?s supply of raw materials valued at delivery prices?

Twelve

Six

One

Three

29 / 40

Pick out the wrong statement ?

Turn over = opening stock + production closing stock

Working capital = current assets + current liability

Return on investment (ROI) is the ratio of profit before interest & tax and capital employed (i.e. net worth + total debt)

Debt-equity ratio of a chemical company describes the lenders contribution for each rupee of owner?s contribution i.e., debt-equity ratio = total debt/net worth

30 / 40

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

Difference between initial cost and salvage value

Initial cost

Book value at the end of (n ? 1)th year

Depreciation during the (n ? 1)th year

31 / 40

Pick out the wrong statement?

Total cost of production is more than net sales realisation (NSR) at breakeven point

Working capital turnover ratio = sales/net working capital

Net worth means paid up share capital and reserve & surplus (i.e. shareholders equity)

Return on equity = profit after tax/net worth

32 / 40

The amount of compounded interest during ?n? interest periods is__________?

p(1 ? i)n

p[(1+i)n ? 1)]

p(1 + i)n

p(1 + in)

33 / 40

The payback method for the measurement of return on investment_____?

Takes into account the cash inflows after the recovery of investments

Gives a correct picture of profitability

Does not measure the discounted rate of return

Underemphasises liquidity

34 / 40

Which of the following is not a mathematical method for evaluation of profitability of a chemical process plant ?

Discounted cash flow based on full life performance

Cash reserve

Rate of return on investment

Payout period

35 / 40

Operating profit of a chemical plant is equal to_____?

Profit after tax

Profit after tax plus depreciation

Net profit + tax

Profit before interest and tax i.e., net profit + interest + tax

36 / 40

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

All A, B. and C

Is affected by the variation in earnings after the recovery of the investment

37 / 40

Which of the following elements is not included in the scope of market analysis ?

Product distribution

Competition from other manufactures

Economics

Opportunities

38 / 40

Which of the following ceramic packing materials is the costliest of all ?

Pall rings

Raschig rings

Berl saddles

Intalox saddles

39 / 40

Which of the following is not a component of working capital ?

Semi-finished products in the process

Finished products in stock

Transportation facilities

Raw materials is stock

40 / 40

Total product cost of a chemical plant does not include the _______ cost?

Market survey

Operating labour, supervision and supplies

Depreciation, property tax and insurance

Overhead and utilities

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