Chemical Engineering Plant Economics

21.Annual depreciation cost are not constant when, the _________ method of depreciation calculation is used.

  1. Straight line
  2. Sinking fund
  3. Present worth
  4. Declining balance
Correct answer: (D)
Declining balance

22.Annual depreciation costs are constant, when the _________ method of depreciation calculation is used.

  1. Declining balance
  2. Straight line
  3. Sum of the years digit
  4. None of these
Correct answer: (B)
Straight line

23.Chemical engineering plant cost index is used for finding the present cost of a particular chemical plant, if the cost of similar plant at some time in the past is known. The present cost of the plant = original cost × (index value at present/ index value at time original cost was obtained). The most major component of this cost index is

  1. Fabricated equipment and machinery
  2. Process instruments and control
  3. Pumps and compressor
  4. Electrical equipments and material
Correct answer: (A)
Fabricated equipment and machinery

24.Construction expenses are roughly _________ percent of the total direct cost of the plant.

  1. 2
  2. 10
  3. 30
  4. 50
Correct answer: (B)
10

25.Cost of instrumentation in a modern chemical plant ranges from _________ percent of the total plant cost.

  1. 5 to 10
  2. 20 to 30
  3. 40 to 50
  4. 60 to 70
Correct answer: (B)
20 to 30

26.Cost of piping in a fluid processing unit (e.g., distillation) of a chemical process plant is about _________ percent of the fixed capital investment.

  1. 4
  2. 13
  3. 22
  4. 34
Correct answer: (B)
13

27.Depreciation

  1. Costs (on annual basis) are constant when the straight line method is used for its determination
  2. Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time
  3. Does figure in the calculation of income tax liability on cash flows from an investment
  4. All (A), (B) and (C)
Correct answer: (D)
All (A), (B) and (C)

28.Depreciation is _________ in profit with time.

  1. Decrease
  2. Increase
  3. No change
  4. None of these
Correct answer: (A)
Decrease

29.Direct costs component of the fixed capital consists of

  1. Contingencies
  2. Onsite and offsite costs
  3. Labour costs
  4. Raw material costs
Correct answer: (B)
Onsite and offsite costs

30.Effective and nominal interest rates are equal, when the interest is compounded

  1. Annually
  2. Fortnightly
  3. Monthly
  4. Half-yearly
Correct answer: (A)
Annually
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