MIME - Final

MIME - Final - MIME 310 ENGINEERING ECONOMY PRACTICE EXAM...

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MIME 310 ENGINEERING ECONOMY M A Y 2 0 0 8 If you want to maximize the benefits that you derive from this exercise, here's what you should do: ± Give yourself a two to three-hour period to complete the exam ± Don't do the exam with friends; pretend that you're in a real examina- tion room, sitting right in front of an invigilator. ± Don't lose precious time trying to find the solutions or answers in the notes, solutions to the problem exercises or tutorial problems. ± When finished, attend the review on Wednesday, 28 May, at 10:30 in 304 ENGMC to check your answers, or look up the solutions on WebCT. ± Congratulate yourself on the good score, and be assured that you have maximised the benefits derived from this exercise. P R A C T I C E E X A M
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PART 1. True or False Statements – Circle the correct answer on this paper and re- cord it on the computer answer sheet. (1.5 points each for a total of 18) Note : There are no penalties for incorrect answers. 1. In the Canadian tax system, the sale of an asset in a particular asset class can simultane- ously trigger a depreciation recapture and a loss on disposal. A ) T B) F 2. For given demand and supply schedules, the market equilibrium is always in a price inter- val in which demand is elastic because the total consumer expenditure in this price range decreases. A ) T B) F 3. When using the equivalent annual value criterion to compare equipment alternatives, it is assumed that continuous replacements are made for as long as the service of such equipment is required. A ) T B) F 4. A capital gain occurs when a depreciable asset is sold for more than its undepreciated balance at the time of sale, but for less than its purchase price. A ) T B) F 5. In the Canadian tax system, assets belonging to the same class depreciated by the declin- ing-balance method are grouped into pools and depreciated together. A ) T B) F 6. The discounted payback period is superior to the payback period because it considers the cash flows that occur beyond the discounted capital recovery period. A ) T B) F 7. When using an integrated company basis of taxation in project evaluation, any excess of operating expenses and tax allowances over a project's revenue in a particular year is as- sumed to be absorbed by other taxable corporate income of the company. A ) T B) F 8. A change in supply to higher levels is reflected by a vertical upward shift of the supply curve. A ) T B) F 9. The law of diminishing marginal returns states that decreasing amounts of output are in- evitably obtained from successive additions of equal amounts of variable input in a system where fixed resources have achieved their optimum efficiency. A ) T B) F 10. When using the capital tax factor on a capital expenditure, it is assumed that the deprecia- tion allowances can be fully absorbed (i.e. there is enough net income before allowances and taxes) in the year in which they are claimed. A
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MIME - Final - MIME 310 ENGINEERING ECONOMY PRACTICE EXAM...

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