Engg Economics Unit-3 Quiz

A uniform series of payment occurring at equal interval of time is called ______.

• A. Annuity

• B. Amortization

• C. Depreciation

• D. Bond

What is the term for an annuity with a fixed time span?

• A. Ordinary annuity

• B. Perpetuity

• C. Annuity certain

• D. Annuity due

What is the type of annuity where the payments are made at the end of each period starting from the first period?

• A. Ordinary annuity

• B. Perpetuity

• C. Annuity due

• D. Deferred annuity

What annuity is required over 12 years to equate with a future amount of P 20,000? Assume i= 6% annually.

• A. P 1,290.34

• B. P 1,185.54

• C. P 1,107.34

• D. P 1,205.74

A factory operator bought a diesel generator set for P 10,000.00 and agreed to pay the dealer uniform sum at the end of each year for 5 years at 8% interest compounded annually, that the final payment will cancel the debt for principal and interest. What is the annual payment?

• A. P 2,500.57

• B. P 2,544.45

• C. P 2,540.56

• D. P 2,504.57

What is the present worth of a year annuity paying P 3,000.00 at the end of each year, with interest at 8% compounded annually?

• A. P 7,654.04

• B. P 7,731.29

• C. P 7,420.89

• D.P 7,590.12

A man loans P 187,400 from a bank with interest at 5% compounded annually. He agrees to pay his obligations by paying 8 equal annual payments, the first being due at the end of 10 years. Find the annual payments.

• A. P 43,600.10

• B. P 43,489.47

• C. P 43,263.91

• D. P 43,763.20

What is the type of annuity that does not have a fixed time span but continues indefinitely or forever?

• A. Ordinary annuity

• B. Perpetuity

• C. Annuity due

• D. Deferred annuity

What is the type of annuity where the first payment does not begin until some later date in the cash flow?

• A. Ordinary annuity

• B. Perpetuity

• C. Annuity due

• D. Deferred annuity

Which is NOT an essential element of an ordinary annuity?

• A. The amounts of all payments are equal.

• B. The payments are made at equal interval of time.

• C. The first payment is made at the beginning of the first period.

• D. Compound interest is paid on all amounts in the annuity.