Engineering Economics 1

Objective Questions and Answers of Civil Engineering: Engineering Economics 1

Subject: Engineering Economics 1

Part 1: Objective questions and answers of Engineering Economics


Q1. A farmer selling eggs at 50 pesos a dozen gains 20%. If he sells the eggs at the same price after the costs of the eggs rises by 12.5%, how much will be his new gain in percent?

a) 6.89 %

b) 6.65 %

c) 6.58 %

d) 6.12 %


Q2. The exact simple interest of P5,000 invested from June 21, 1995 to December 25, 1995 is P100. What is the rate of interest?

a) 3.90 %

b) 3.92 %

c) 3.95 %

d) 3.98 %


Q3. A loan of P5,000 is made for a period of 15 months, at a simple interest rate of 15%, what future amount is due at the end of the loan period?

a) 5,937.50

b) 5,873.20

c) 5,712.40

d) 5,690.12


Q4. The monthly demand for ice cans being manufactured by Mr. Camus is 3200 pieces. With a manual operated guillotine, the unit cutting cost is P25.00. An electrically operated hydraulic guillotine was offered to Mr. Camus at a price of P275,000.00 and which cuts by 30% the unit cutting cost. Disregarding the cost of money, how many months will Mr. Camus be able to recover the cost of the machine if he decides to buy now?

a) 10 months

b) 11 months

c) 12 months

d) 13 months


Q5. A investor wishes to earn 7% on his capital after payment of taxes. If the income from an available investment will be taxed at an average rate of 42%, what minimum rate of return, before payment of taxes, must the investment offer to be justified? 

a) 12.07 %

b) 12.34 %

c) 12.67 %

d) 12.87 %


Q6. A college freshman borrowed P2,000 from a bank for his tuition fee and promised to pay the amount for one year. He received only the amount of P1,920 after the bank collected the advance interest of P80.00. What was the rate of discount?

a) 3.67 %

b) 4.00 %

c) 4.15 %

d) 4.25 %


Q7. Miss Evilla borrowed money from a bank. She receives from the bank P1,340.00 and promised to pay P1,500.00 at the end of 9 months. Determine the corresponding discount rate or often referred to as the “banker’s discount”.

a) 13.15 %

b) B. 13.32 %

c) C. 13.46 %

d) D. 13.73 %


Q8. A loan for P50,000 is to be paid in 3 years at the amount of P65,000. What is the effective rate of money?

a) 9.01 %

b) 9.14 %

c) 9.31 %

d) 9.41 %


Q9. By the condition of a will, the sum of P20,000 is left to a girl to be held in trust fund by her guardian until it amounts to P50,000. When will the girl receive the money if fund invested at 8% compounded quarterly?

a) 11.23 years

b) 11.46 years

c) 11.57 years

d) 11.87 years


Q10. What is the present worth of two P 100 payments at the end of the third year and fourth year? The annual interest rate is 8%.

a) P 150.56

b) P 152.88

c) P 153.89

d) P 151.09


Q11. What rate of interest compounded annually is the same as the rate of interest of 8% compounded quarterly?

a) 8.07 %

b) 8.12 %

c) 8.16 %

d) 8.24 %


Q12. An amount of P1,000 becomes P1,608.44 after 4 years compounded bimonthly. Find the nominal interest.

a) 11.89 %

b) 12.00 %

c) 12.08 %

d) 12.32 %


Q13. Mandarin Bank advertises 9.5% account that yields 9.84% annually. Find how often the interest is compounded.

a) Monthly

b) Bimonthly

c) Quarterly

d) Annually


Q14. In year zero, you invest P 10,000.00 in a 15% security for 5 years. During that time, the average annual inflation is 6%. How much in terms of year zero pesos will be in the account at maturity?

a) P 15,030.03

b) P 20,113.57

c) P 18,289.05

d) P 16,892.34


Q15. What is the present worth of a P500 annuity starting at the end of the third year and continuing to the end of the fourth year, if the annual interest rate is 10 %?

a) P 727.17

b) P 717.17

c) P 714.71

d) P 731.17


Q16. A factory operator bought a diesel generator set for P 10,000.00 and agreed to pay the dealer uniform sum at the end of each year for 5 years at 8% interest compounded annually, that the final payment will cancel the debt for principal and interest. What is the annual payment?

a) P 2,500.57

b) P 2,544.45

c) P 2,540.56

d) P 2,504.57


Q17. A man loans P 187,400 from a bank with interest at 5% compounded annually. He agrees to pay his obligations by paying 8 equal annual payments, the first being due at the end of 10 years. Find the annual payments.

a) P 43,600.10

b) P 43,489.47

c) P 43,263.91

d) P 43,763.20


Q18. A young engineer borrowed P 10,000 at 12% interest and paid P 2,000 per annum for the last 4 years. What does he have to pay at the end of the fifth year in order to pay off his loan?

a) P 6,999.39

b) P 6,292.93

c) P 6,222.39

d) P 6,922.93


Q19. A P 1,000,000 issue of 3%, 15-year bond was sold at 95%. What is the rate of interest of this investment?

a) 3.0%

b) 3.4%

c) 3.7%

d) 4.0%


Q20. A VOM has a selling price of P 400. If its selling price is expected to decline at a rate of 10% per annum due to obsolescence, what will be its selling price after 5 years?

a) P 222.67

b) P 212.90

c) P 236.20

d) P 231.56


Part 1: Objective questions and answers of Engineering Economics


Q1. Answer b


Q2. Answer a


Q3. Answer a


Q4. Answer c


Q5. Answer a


Q6. Answer b


Q7. Answer d


Q8. Answer b


Q9. Answer c


Q10. Answer b


Q11. Answer d


Q12. Answer b


Q13. Answer c


Q14. Answer a


Q15. Answer b


Q16. Answer d


Q17. Answer d


Q18. Answer d


Q19. Answer a


Q20. Answer c