Engineering Economics 2

Objective Questions and Answers of Civil Engineering: Engineering Economics 2

Subject: Engineering Economics 2

Part 2: Objective questions and answers of Engineering Economics


Q1. First Benchmark Publishing’s gross margin is 50% of sales. The operating costs of the publishing are estimated at 15% of sales. If the company is within the 40% tax bracket, determine the percent of sales is their profit after taxes?

a) 21 %

b) 20 %

c) 19 %

d) 18 %


Q2. A feasibility study shows that a fixed capital investment of P10,000,000 is required for a proposed construction firm and an estimated working capital of P2,000,000. Annual depreciation is estimated to be10% of the fixed capital investment. Determine the rate of return on the total investment if the annual profit is P3,500,000.

a) 28.33 %

b) 29.17 %

c) 30.12 %

d) 30.78 %


Q3. Engr. Trinidad loans from a loan firm an amount of P100,000 with a rate of simple interest of 20% but the interest was deducted from the loan at the time the money was borrowe If at the end of one year, she has to pay the full amount of P100,000, what is the actual rate of interest?

a) 23.5 %

b) 24.7 %

c) 25.0 %

d) 25.8 %


Q4. Mr. Bacani borrowed money from the bank. He received from the bank P1,842 and promised to repay P2,000 at the end of 10 months. Determine the rate of simple interest.

a) 12.19 %

b) 12.03 %

c) 11.54 %

d) 10.29 %


Q5. It is the practice of almost all banks in the Philippines that when they grant a loan, the interest for one year is automatically deducted from the principal amount upon release of money to a borrower. Let us therefore assume that you applied for a loan with a bank and the P80,000 was approved at an interest rate of 14% of which P11,200 was deducted and you were given a check of P68,800. Since you have to pay the amount of P80,000 one year after, what then will be the effective interest rate?

a) 16.02 %

b) 16.28 %

c) 16.32 %

d) 16.47 %


Q6. A man invested P110,000 for 31 days. The net interest after deducting 20% withholding tax is P890.36. Find the rate of return annually.

a) 11.50 %

b) 11.75 %

c) 11.95 %

d) 12.32 %


Q7. Mr. Jun Ramos was granted a loan of P20,000 by his employer Excel First Review and Training Center, Inwith an interest of 6% for 180 days on the principal collected in advance. The corporation would accept a promissory note for P20,000 non-interest for 180 days. If discounted at once, find the proceeds of the note.

a) P18,000

b) P18,900

c) P19,000

d) P19,100


Q8. What is the ordinary interest on P1,500.50 for 182 days at 5.2%?

a) P39.01

b) P39.82

c) P39.45

d) P39.99


Q9. What is the effective rate corresponding to 18% compounded daily? Take 1 year is equal to 360 days.

a) 19.61 %

b) 19.44 %

c) 19.31 %

d) 19.72 %


Q10. Which of these gives the lowest effective rate of interest?

a) 12.35 % compounded annually

b) 11.90 % compounded annually

c) 12.20 % compounded annually

d) 11.60 % compounded annually


Q11. How long will it take money to double itself if invested at 5% compounded annually?

a) 13.7 years

b) 14.7 years

c) 14.2 years

d) 15.3 years


Q12. A sum of P1,000 is invested now and left for eight years, at which time the principal is withdrawn. The interest has accrued is left for another eight years. If the effective annual interest rate is 5%, what will be the withdrawal amount at the end of the 16th year? 

a) P693.12

b) P700.12

c) P702.15

d) P705.42


Q13. A student plans to deposit P1,500 in the bank now and another P3,000 for the next 2 years. If he plans to withdraw P5,000 three years from after his last deposit for the purpose of buying shoes, what will be the amount of money left in the bank after one year of his withdrawal? Effective annual interest rate is 10%.

a) P1,549.64

b) P1,459.64

c) P1,345.98

d) P1,945.64


Q14. You borrow P3,500.00 for one year from a friend at an interest rate of 1.5% per month instead of taking a loan from a bank at a rate of 18% per year. How much lesser you will pay by borrowing the money from the bank?

a) P 62.44

b) P44.55

c) P54.66

d) P37.56


Q15. A firm borrows P2,000 for 6 years at 8%. At the end of 6 years, it renews the loan for the amount due plus P2,000 more for 2 years at 8%. What is the lump sum due?

a) P 3,260.34

b) P 3,280.34

c) P 3,270.34

d) P 3,250.34


Q16. The institute of Electronics and Communications Engineers of the Philippines (IECEP) is planning to put up its own building. Two proposals being considered are: A. The construction of the building now to cost P 400,000 The construction of a smaller building now to cost P300,000 and at the end of 5 years, an extension to be added to cost P 200,000. By how much is proposal B more economical than proposal A if interest rate is 20% and depreciation to be neglected?

a) P 19,122.15

b) P 19,423.69

c) P 19,518.03

d) P 19,624.49


Q17. What annuity is required over 12 years to equate with a future amount of P 20,000? Assume i= 6% annually.

a) P 1,290.34

b) P 1,185.54

c) P 1,107.34

d) P 1,205.74


Q18. What is the present worth of a year annuity paying P 3,000.00 at the end of each year, with interest at 8% compounded annually?

a) P 7,654.04

b) P 7,731.29

c) P 7,420.89

d) P 7,590.12


Q19. A person buys a piece of lot for P 100,000 down payment and 10 deferred semi-annual payments of P 8,000 each, starting three years from now. What is the present value of the investment if the rate of interest is 12% compounded semi-annually?

a) P 142,999.08

b) P 143,104.89

c) P 142,189.67

d) P 143,999.08


Q20. Miss Calledo deposited P 1,000, P 1,500 and P 2,000 at the end of the 2nd year, 3rd year and 4th year, respectively in a savings account which earned 10% per annum. How much is in the account at the end of the 4th year?

a) P 4,880.00

b) P 4,820.00

c) P 4,860.00

d) P 4,840.00


Part 2: Objective questions and answers of Engineering Economics


Q1. Answer a


Q2. Answer b


Q3. Answer c


Q4. Answer d


Q5. Answer b


Q6. Answer b


Q7. Answer a


Q8. Answer c


Q9. Answer d


Q10. Answer d


Q11. Answer c


Q12. Answer d


Q13. Answer a


Q14. Answer c


Q15. Answer a


Q16. Answer d


Q17. Answer b


Q18. Answer b


Q19. Answer d


Q20. Answer c