sample exam

# sample exam - Engineering Economics ECO 1192 First Partial...

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1. The baseline for the acceptance or rejection of a project using the External Rate of Return method is a) MARR b) Recovery period less than the industry threshold c) \$0 d) 1 e) None of the above answers. 2. If the rate of interest is 8% compounded quarterly, the nominal rate of interest (annual) is Engineering Economics        ECO 1192                       Page 1 Engineering Economics ECO 1192 First Partial Examination (PE1) C.Théoret

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3. A common period of analysis is required to determine the economic validity of two projects, A and B, when using the Present Worth method. a) True b) False 4. If the rate of interest is 16% compounded quarterly, the effective rate of interest (annual) is 5. A project with a Net Present Worth of \$-300 (negative) must have a negative external rate of return. 6. A project with a \$0 Net Present Worth must have a lower rate of return than the MARR. a) True b) False. 7. The nominal rate of interest will exceed the effective rate of interest when a) simple interest is used b) compounding tends to infinity c) the nominal rate exceeds MARR d) None of the above answers. 8. Which effective rate of interest compounded semi-annually is equivalent to an actual monthly rate of 2%? INFORMATION FOR QUESTIONS 9 to 12 Projects A to F are ranked in ascending order of their first cost have identical lives (N) have negligible salvage values (SV=0). PROJECTS RATES OF RETURN A B C D E F Engineering Economics        ECO 1192                       Page 2
A 22 - - - - - B 23 25 - - - - C 21 20 20 - - - D 20 19 18 16 - - E 19 18 17 15 14 - F 15 14 13 12 15 9

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