POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

COLLEGE OF ENGINEERING
DEPARTMENT OF INDUSTRIAL ENGINEERING

Economics, Study, Method (QUIZ)

1. Define Minimum Attractive Rate of Return (MARR).
a. MARR is always consistent.
b. MARR is a reasonable rate of return established for the evaluation and selection of
alternatives.
c. MARR is lower than the rate of return on “safe investment”
d. All of the above.
2-3. Identify two of the five Reasons of Varying MARR.
a. Minimum Acceptable Rate of Return
b. Tax structure
c. Cash Transfer
d. Investment opportunities
e. Online Banking
4. What is the range of typical values on expected rate of inflation?
a. 10%
b. 18%
c. 5%
d. 0%
5. This method is used particularly in an investment situation where we need to compute the
equivalent worth of the project at the end of its investment period.
a. Past Worth
b. Present Worth
c. Future Worth
d. Annual Worth
6. In future worth, we accept the decision if:
a. FW (i) < 0
b. FW (i) > 0
c. FW (i) = 0
d. FW (i) ≠ 0
7. In future worth, we reject the decision if:
a. FW (i) < 0
b. FW (i) > 0
c. FW (i) = 0
d. FW (i) ≠ 0
8. In the formula of future worth, what does P stands for?
a. Present Worth
b. Principle Interest
c. Product Amount
 d. Principle Amount
9. It is the equivalent uniform annual worth of all estimated receipts (income) and
disbursements.
a. Capital Recovery
b. Annual Worth Analysis
c. Permanent Investment
d. Funds
10. It is the equivalent annual cost of owning the asset plus the return on the initial investment.
a. Capital Recovery
b. Annual Worth Analysis
c. Permanent Investment
d. Funds
11. Dams, stadiums, airports and endowments are called _________.
a. Capital Recovery
b. Annual Worth Analysis
c. Permanent Investment
d. Funds
12. In what case that the alternatives have different economic lives?
a. Case 1&2
b. Case 1
c. Case 2
d. Case 3
13. ___________________ is the discounting rate where the total of initial cash outlay and
discounted cash inflows are equal to zero.
a. External Rate of Return
b. Internal Rate of Return
c. Rate of Return
d. Hurdle Rate
14. ______________ is a function of management which uses various techniques, like Internal
Rate of Return, to assist in decision making.
a. Business Marketing
b. Management Company
c. Capital Budgeting
d. Company planning
15. It refers to the change in a company's cash balance as detailed on its cash flow statement.
a. Net Cash Flow
b. Inflow
c. Outflow
d. Revenue
16. This method directly takes into account the interest rate to a project at which net cash flows
generated or required by the project over its life can be reinvested or borrowed.
a. External Rate Method
b. Internal Rate of Return
c. External Rate of Return
 d. Acceptable Rate of Return
17. If ERR is greater than MARR, it means that?
a. It means that you computed well.
b. It means nothing.
c. It is a “Bad Investment”.
d. It is a “Good Investment”.
18. What does “rt” represent?
a. Interest rate
b. Reinvestment rate
c. Rate return
d. External rate
19. Suppose you are offered a project with the following payments.
YEAR CASH FLOW ($)
0 10,000
1 -4,300
2 -3,900
3 -3,200
4 -1,200
What is the IRR of this offer?
a. 11.94%
b. 11.84%
c. 10.94%
d. 10.84%
20. A financial calculation that measures the worth of a future amount of money or stream of
payments in today’s adjusted for interest and inflation.
a. Future Worth
b. Present Worth
c. Past Worth
d. Annual Worth
21. It is the process in which prices of goods and services rise over time.
a. Inflation
b. Rate of Return
c. Future Worth
d. Present Worth
22. _______________ is the concept that states an amount of money today is worth more than
that same amount in the future.
a. Future Worth
b. Present Worth
c. Past Worth
d. Annual Worth
23. The following are needed in computing the Present Worth, except:
a. Future Value
b. Interest Rate
 c. Inflation Rate
d. Number of period
24. This is the amount of money that is readily available for investment and spending.
a. Capital
b. Assets
c. Liquidity
d. Cash
25. All are examples of liquidity except:
a. Capital
b. Bonds
c. Equipment
d. Bills
26. This is considered in discounted payback period but not in simple payback period.
a. Cost over time
b. Time value of money
c. Total Profit
d. Total discounted amount
27. This is a ratio used to analyze the summary of overall relationship between the relative costs
and benefits of a proposed project.
a. Current Ratio
b. Benefit-Cost Ratio
c. Liquidity Ratio
d. Quick asset ratio
28. BCR > 1 0 means __________ net present value.
a. Positive
b. Negative
c. Neutral
d. No change in
29. Salvage value means
a. Manufacturer value
b. Market value
c. Consume value
d. Contractor value
30. If a project's BCR is less than 1.0, the project's costs _______ the benefits, and it should not
be considered.
a. Exceeds
b. Balannced
c. Is lesser than
d. None of the above
Prepared by:
Ambar, Carla Angelica
Andres, Maria Nicole
Apatan, Vienne
Alceso, Race John
Alfonso, Kherwin
Cendaña, Benjie Mel
Estacio, Richmond Earl
Gamino, Christina
Landicho, Vera Michaela
Meneses, Justine Ivan
Portosa, Kim Reginald
Romera, Kurt Clyde
Rosal, Carla Fae

BSIE 2-1