An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the
Manufacturing cost
Depreciation by sinking fund method
Discrete compound interest
Cash ratio
Correct Answer :
B. Depreciation by sinking fund method
Related Questions
Expenditure on research and development (R & D) is categorised as the __________, while making an estimate of the total product cost for a chemical plant.
Overhead cost
Fixed expenses
General expenses
Direct production cost
Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method?
Multiple straight line method
Sinking fund method
Declining balance method
Sum of the years digit method
Which of the following is not a component of the working capital for a chemical process plant?
Product inventory
In-process inventory
Minimum cash reserve
Storage facilities
An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be
1000 (1 + 0.1/4)20
1000 (1 + 0.1)20
1000 (1 + 0.1/4)5
1000 (1 + 0.1/2)5
Personnel working in the market research group is responsible for the job of
Equipment selection
Product evaluation
Equipment design
Cost estimation
Manufacturing cost in a chemical company does not include the
Fixed charges
Plant overheads
Direct products cost
Administrative expenses
Maximum production start up cost for making a chemical plant operational is about __________ percent of the fixed capital cost.
1
5
10
30
Pick out the wrong statement.
Gross revenue is that total amount of capital received as a result of the sale of goods or service
Net revenue is the total profit remaining after deducting all costs excluding taxes
The ratio of immediately available cash to the total current liabilities is known as the cash ratio
Consolidated income statement based on a given time period indicates surplus capital and shows the relationship among total income, costs & profit over the time interval
Factory manufacturing cost is the sum of the direct production cost
Fixed charges and plant overhead cost
And plant overhead cost
Plant overhead cost and administrative expenses
None of these
Pick out the wrong statement.
Longer tubes are less expensive per unit heat transfer area as compared to shorter tubes
A cost index is merely a number for a given year showing the cost at that time relative to a certain base year
Turnover ratio of a chemical plant is the ratio of gross annual sales to the fixed capital investment
Plates with butt welded joints are less expensive compared to lap welded joints, because squaring of plates is not necessary
The payback method for the measurement of return on investment
Gives a correct picture of profitability
Underemphasises liquidity
Does not measure the discounted rate of return
Takes into account the cash inflows after the recovery of investments
An investment of Rs. 100 lakhs is to be made for construction of a plant, which will take two years to start production. The annual profit from the operation of the plant is Rs. 20 lakhs. What will be the payback time?
5 years
7 years
12 years
10 years
Gantt chart (or Bar chart) is helpful in
Efficient utilisation of manpower and machines
Preparing production schedule
Efficient despatching of products
Inventory control
__________ of depreciation calculation does not take into account the interest on investments.
Present worth method
Sinking fund method
Sum of the years-digits method
All (A), (B) and (C)
The 'total capital investment' for a chemical process plant comprises of the fixed capital investment and the
Overhead cost
Working capital
Indirect production cost
Direct production cost
A present sum of Rs. 100 at the end of one year, with half yearly rate of interest at 10%, will be Rs.
121
110
97
91
Which of the following is not a component of depreciation cost?
Repairs and maintenance cost
Loss due to obsolescence of the equipment
Loss due to decrease in the demand of product
Loss due to accident/breakdown in the machinery
Payback period
And economic life of a project are the same
Is the length of time over which the earnings on a project equals the investment
Is affected by the variation in earnings after the recovery of the investment
All (A), (B) and (C)
__________ of depreciation calculation accounts for the interest on investment.
Straight line method
Declining balance
Both (A) and (B)
Neither (A) nor (B)
Optimum number of effects in a multiple effect evaporator is decided by the
Cost benefit analysis
Floor area availability
Terminal parameters
Evaporation capacity required
In financial accounting of a chemical plant, which of the following relationship is invalid?
Assets = equities
Assets = liabilities + net worth
Total income = costs + profits
Assets = capital
If an amount R is paid at the end of every year for 'n' years, then the net present value of the annuity at an interest rate of i is
R [{(1 + i)n - 1}/ i ]
R [{(1 + i)n - 1}/ i (1 + i)n]
R(1 + i)n
R/(1 + i)n
The ratio of gross annual sales to the fixed capital investment is termed as the __________ ratio.
Cash reserve
Capital
Turnover
Investment
In a chemical process plant, the total product cost comprises of manufacturing cost and the
General expenses
Overhead cost
R & D cost
None of these
Cost of piping in a fluid processing unit (e.g., distillation) of a chemical process plant is about __________ percent of the fixed capital investment.
4
13
22
34
__________ taxes are based on gross earnings.
Property
Excise
Income
Capital gain
In an ordinary chemical plant, electrical installation cost may be about
10-15% of purchased equipment cost
3-10% of fixed capital investment
Either (A) or (B)
Neither (A) nor (B)
Cost of instrumentation in a modern chemical plant ranges from __________ percent of the total plant cost.
5 to 10
20 to 30
40 to 50
60 to 70
Purchased cost of equipments for a chemical process plant ranges from __________ percent of the fixed capital investment.
10 to 20
20 to 40
45 to 60
65 to 75
With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project
Decreases
Increases
Increases linearly
Remain constant