Chemical Engineering Plant Economics — Part 1 MCQs with Explanations

The net working capital of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities. Option A: Cash ratio. The cash ratio is a financial metric that compares a company's cash and cash equivalents to its current liabilities. Option B: Net working capital. This is the correct answer as it represents the difference between current assets and current liabilities, indicating the liquidity available to a company. Option C: Current ratio. The current ratio is another financial metric that compares a company's current assets to its current liabilities, providing an indication of the company's ability to cover its short-term liabilities with its short-term assets. Option D: Liquid assets. While similar to net working capital, liquid assets typically refer to assets that can be easily converted into cash without significant loss of value, whereas net working capital specifically considers the difference between current assets and current liabilities. Therefore, the correct answer is Option B: Net working capital .

Book value at the end of (n - 1)th year is the correct answer to “The depreciation during the year 'n', in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage 'N' to the”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Chemical equipments is the correct answer to “Which of the following is not a current asset of a chemical company”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Annual depreciation is the fixed percentage of the property value at the beginning of the particular year is the correct answer to “In declining balance method of depreciation calculation, the”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Gross earning is the correct answer to “Generally, income taxes are based on the”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Annuity is the correct answer to “A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Decreases is the correct answer to “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”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Total product cost = direct production cost + plant overhead cost is the correct answer to “Which of the following relationship is not correct is case of a chemical process plant”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Cash reserve is the correct answer to “Which of the following is not a mathematical method for evaluation of profitability of a chemical process plant”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

General expenses is the correct answer to “In a chemical process plant, the total product cost comprises of manufacturing cost and the”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Fixed charges and plant overhead cost is the correct answer to “Factory manufacturing cost is the sum of the direct production cost”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Direct production cost is the correct answer to “Utilities cost in the operation of chemical process plant comes under the”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Legal fees is the correct answer to “Which of the following does not come under the sales expenses for a product of a chemical plant”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

50 is the correct answer to “Most chemical plants use an initial working capital amounting to 10-20% of the total capital investment. But this percentage may increase to __________ percent in case of seasonal products manufacturing plant.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

n0.6 is the correct answer to “According to six-tenths-factor rule, if the cost of a given unit at one capacity is known, then the cost of similar unit with times the capacity of the first unit is approximately equal to __________ times the cost of the initial unit.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

$$1000{\left( {1 + \frac{{0.1}}{4}} \right)^{20}}$$ is the correct answer to “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”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Onsite and offsite costs is the correct answer to “Direct costs component of the fixed capital consists of”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

20 to 40 is the correct answer to “Purchased cost of equipments for a chemical process plant ranges from __________ percent of the fixed capital investment.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

13 is the correct answer to “Cost of piping in a fluid processing unit (e.g., distillation) of a chemical process plant is about __________ percent of the fixed capital investment.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

$$\frac{{\text{S}}}{{{{\left( {1 + {\text{i}}} \right)}^{\text{n}}}}}$$ is the correct answer to “If 'S' is the amount available after 'n' interest periods for an initial principal 'P' with the discrete compound interest rate 'i', the present worth is given by”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

35 to 45 is the correct answer to “Equipment installation cost in a chemical process plant ranges from __________ percent of the purchased equipment cost.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Plain carbon steel is the correct answer to “Which of the following is the cheaptest material of construction for the storage of sodium hydroxide upto a concentration of 75%”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Diminishing balance is the correct answer to “Out of the following, the depreciation calculated by the __________ method is the maximum.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Decrease is the correct answer to “Depreciation is __________ in profit with time.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

0.6 is the correct answer to “Following the six-tenth factor rule, if a log-log plot of capacity of the equipment vs. cost of the equipment is made, then a straight line is obtained, whose slope is equal to”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Total annual product cost equals the total annual sales is the correct answer to “In a manufacturing industry, break even point occurs, when the”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

>20 is the correct answer to “If the interest rate of 10% per period is compounded half yearly, the actual annual return on the principal will be __________ percent.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

One is the correct answer to “The inventory of raw materials included in the working capital is usually about __________ months supply of raw materials valued at delivery prices.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

5 years is the correct answer to “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 pay back time”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

1.5% is the correct answer to “The total investment in a project is Rs. 10 lakhs and the annual profit is 1.5 lakhs. If the project life is 10 years, then the simple rate of return on investment is”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Break even point is the correct answer to “For a typical project, the cumulative cash flow is zero at the”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

800 is the correct answer to “A machine has an initial value of Rs. 5000, service life of 5 years and final salvage value of Rs. 1000. The annual depreciation cost by straight line method is Rs.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Repair and maintenance charges is the correct answer to “Fixed charges for a chemical plant does not include the”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Transportation facilities is the correct answer to “Which of the following is not a component of working capital”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Obsolescence is the correct answer to “Functional depreciation of an equipment is the measure of decrease in its value due to its”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Linearly is the correct answer to “The value of a property decreases __________ with time in straight line method of determining depreciation.”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Much more is the correct answer to “The economic life of a large chemical process plant as compared to a small chemical plant is”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

All of the above is the correct answer to “Depreciation”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

p[(1 + i)n - 1] is the correct answer to “The amount of compounded interest during 'n' interest periods is”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.

Alectrolysis of water is the correct answer to “Which of the following is the costliest source of getting hydrogen on commercial scale for the manufacture of nitrogeneous fertiliser”. This question is standard in competitive examination syllabi for Chemical Engineering Plant Economics.