Practice Test GeeksBSE - Mgt Bachelor of Science in Engineering Management Practice Test
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Engineering Economics and Financial Management Flashcards

6 cards from real BSE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. What does the term 'time value of money' mean in engineering economics?

    Answer: Money available now is worth more than the same amount in the future

    The time value of money reflects that a dollar today can be invested to earn returns, making it worth more than a dollar received in the future.

  2. Which capital budgeting method calculates the discount rate at which an investment's NPV equals zero?

    Answer: Internal Rate of Return (IRR)

    The Internal Rate of Return (IRR) is the discount rate that makes the net present value of all cash flows from an investment equal to zero.

  3. A machine costs $50,000 and saves $12,000 per year. What is the simple payback period?

    Answer: 4.17 years

    Simple payback period = Initial Cost / Annual Savings = $50,000 / $12,000 ≈ 4.17 years.

  4. Which depreciation method allocates an equal amount of cost each year over the asset's useful life?

    Answer: Straight-Line Depreciation

    Straight-line depreciation spreads the cost evenly by dividing (cost minus salvage value) by the useful life.

  5. In engineering economics, what is the 'MARR'?

    Answer: Minimum Attractive Rate of Return

    The Minimum Attractive Rate of Return (MARR) is the lowest rate of return a company will accept before undertaking an investment.

  6. What is a sunk cost in the context of engineering management decision-making?

    Answer: A cost already incurred and non-recoverable

    Sunk costs are past expenditures that cannot be recovered and should not influence future investment decisions.