BSEM Engineering Economics & Cost Estimation

Question 1

What is the primary purpose of a benefit-cost ratio (BCR) analysis in engineering projects?

Accepted Answer

To compare project benefits to its costs to determine economic viability

Answer

To calculate the total labor cost of a project

Answer

To estimate material quantities needed for construction

Answer

To schedule project milestones and deadlines

Question 2

Which depreciation method allocates equal expense amounts each year over an asset's useful life?

Accepted Answer

Straight-line depreciation

Answer

Double declining balance

Answer

Sum-of-years digits

Answer

Units of production

Question 3

In engineering economics, 'sunk cost' refers to:

Accepted Answer

Costs already incurred and unrecoverable regardless of future decisions

Answer

Future costs that can be avoided by a decision

Answer

Variable costs that fluctuate with production volume

Answer

Costs allocated to overhead and indirect expenses

Question 4

What does the term 'payback period' measure in project evaluation?

Accepted Answer

The time required for cumulative savings or revenue to recover the initial investment

Answer

The total profit earned over a project's lifetime

Answer

The interest rate that makes net present value equal to zero

Answer

The ratio of net income to total project cost

Question 5

Which cost estimation method relies on historical data from similar completed projects to predict new project costs?

Accepted Answer

Analogous estimating

Answer

Bottom-up estimating

Answer

Parametric estimating

Answer

Three-point estimating

Question 6

Net Present Value (NPV) discounts future cash flows back to the present using which rate?

Accepted Answer

Required rate of return (discount rate)

Answer

Inflation rate

Answer

Prime lending rate

Answer

Federal funds rate