CCE CCE Financial Analysis & Economic Evaluation 1

Question 1

What does the Net Present Value (NPV) method measure in engineering economic analysis?

Accepted Answer

The difference between the present value of cash inflows and outflows

Answer

The payback period of an investment

Answer

The average annual return on investment

Answer

The ratio of benefits to costs

Question 2

If a project has an Internal Rate of Return (IRR) greater than the Minimum Attractive Rate of Return (MARR), the project is considered:

Accepted Answer

Economically acceptable

Answer

Economically unacceptable

Answer

Break-even

Answer

Too risky to evaluate

Question 3

The Benefit-Cost Ratio (BCR) method recommends project acceptance when BCR is:

Accepted Answer

Greater than or equal to 1.0

Answer

Less than 0

Answer

Equal to 0

Answer

Less than 1.0

Question 4

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

Accepted Answer

Straight-Line

Answer

Double Declining Balance

Answer

Sum-of-Years Digits

Answer

MACRS

Question 5

What is 'salvage value' in the context of engineering economic analysis?

Accepted Answer

The estimated market value of an asset at the end of its useful life

Answer

The original purchase price of an asset

Answer

The annual maintenance cost of an asset

Answer

The replacement cost of an asset after depreciation

Question 6

The 'payback period' method calculates:

Accepted Answer

The time required to recover the initial investment from net cash inflows

Answer

The present value of all future cash flows

Answer

The annual rate of return on an investment

Answer

The ratio of net income to total assets