CHEMICAL ENGINEERING PLANT ECONOMICS QUIZ

Depreciation

Does figure in the calculation of income tax liability on cash flows from an investment

All of these

Is the unavoidable loss in the value of the plant, equipment and materials with lapse in time

Costs (on annual basis) are constant when the straight line method is used for its determination

TRUE ANSWER : ?
YOUR ANSWER : ?

Manufacturing cost in a chemical company does not include the

Plant overheads

Administrative expenses

Direct products cost

Fixed charges

TRUE ANSWER : ?
YOUR ANSWER : ?

The inventory of raw materials included in the working capital is usually about __________ months supply of raw materials valued at delivery prices.

One

Three

Six

Twelve

TRUE ANSWER : ?
YOUR ANSWER : ?

Payback period

Is the length of time over which the earnings on a project equals the investment

All of these

Is affected by the variation in earnings after the recovery of the investment

And economic life of a project are the same

TRUE ANSWER : ?
YOUR ANSWER : ?

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 x (index value/(index value at original cost was obtained)The most major component of this cost index is

Fabricated equipment and machinery

Electrical equipments and material

Process instruments and control

Pumps and compressor

TRUE ANSWER : ?
YOUR ANSWER : ?

Functional depreciation of an equipment is the measure of decrease in its value due to its

Ageing

Obsolescence

Breakdown or accident

Wear and tear

TRUE ANSWER : ?
YOUR ANSWER : ?

Optimum number of effects in a multiple effect evaporator is decided by the

Cost benefit analysis

Evaporation capacity required

Terminal parameters

Floor area availability

TRUE ANSWER : ?
YOUR ANSWER : ?

Maximum production start up cost for making a chemical plant operational is about __________ percent of the fixed capital cost.

10

5

1

30

TRUE ANSWER : ?
YOUR ANSWER : ?

Effluent treatment cost in a chemical plant is categorised as the __________ cost.

Utilities

Fixed

Capital

Overhead

TRUE ANSWER : ?
YOUR ANSWER : ?

The payback method for the measurement of return on investment

Does not measure the discounted rate of return

Gives a correct picture of profitability

Underemphasises liquidity

Takes into account the cash inflows after the recovery of investments

TRUE ANSWER : ?
YOUR ANSWER : ?

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