Winter 2007 - Practice Exam

Winter 2007 - Practice Exam - MIME 310 ENGINEERING ECONOMY...

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MIME 310 ENGINEERING ECONOMY APRIL 2007 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, look up the solutions on WebCT and correct the exam. § 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 P R A C T I C E E X A M
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1 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.
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Winter 2007 - Practice Exam - MIME 310 ENGINEERING ECONOMY...

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