CONTEMPORARY ENGINEERING ECONOMICS EXAM 2026 COMPLETE QUESTION SET AND CORRECT ANSWERS GRADED A PLUS

CONTEMPORARY ENGINEERING ECONOMICS
EXAM 2026 COMPLETE QUESTION SET AND
CORRECT ANSWERS GRADED A PLUS

◉ FUNDAMENTAL DIFFERENCE BETWEEN CTF AND CSF IS?
A. CTF is applied to a salvage value of a capital asset while CSF is
applied to the asset's
first cost
B. CTF is applied to the first cost of a capital asset while CSF is
applied to the asset's salvage value
C. CTF is applied to the project's benefits while CSF is applied to the
project's costs
D. CTF is applied to a capital asset's first cost while CSF is applied to
the asset's operating costs
E. Both are applied to a capital asset's first cost depending on the
time of the asset's purchase.
Answer: CTF is applied to the first cost of a capital asset while CSF is
applied to the asset's salvage value


◉ WHICH OF THE FOLLOWING IS THE BEST MEASURE OF A
PROJECT'S RISK?
A. IRR
B. AW(Project)

,C. EV of project's PW with standard dev
D. BCR
E. Market interest rate.
Answer: Benefit-cost ratio


◉ IN ORDER TO CALCULATE CSF, AMONG OTHER THINGS IT IS
NECESSARY TO KNOW...
A. The before-tax interest rate, CCA rate and the tax rate
B. The after-tax interest rate, CCA rate, and the tax rate
C. The after-tax interest rate, the depreciation rate and the tax rate
D. The before-tax interest rate, tax rate and the depreciation rate
E. The after-tax interest rate, external rate of return and tax rate.
Answer: The after-tax interest rate, CCA rate, and the tax rate


◉ ONE FUNDAMENTAL DIFFERENCE BETWEEN SOCIAL BCA AND
FINANCIAL CASH FLOW ANALYSIS IS?
A. Financial analysis uses social values of costs and benefits while
BCA uses market values
B. Financial analysis takes into account taxes while BCA does not
C. Financial analysis incorporates inflation while BCA does not
D. Financial analysis takes into account time value of money while
BCA does not

,E. Financial analysis uses social discount factor (rate) while BCA
uses market interest rate.
Answer: Financial analysis takes into account taxes while BCA does
not


◉ WHICH OF THE FOLLOWING STATEMENTS IS CORRECT?
A. Inflation rate is the opportunity cost of money
B. Inflation increases the purchasing power of money
C. Inflation rate is given by the CPI
D. CPI is the average price of a fixed basket of consumer goods and
services relative to base year
E. Inflation is a measure of changes in relative prices.
Answer: CPI is the average price of a fixed basket of consumer goods
and services relative to base year


◉ BREAK-EVEN ANALYSIS IMPLIES THAT:
A. A project's costs are exactly equal to the project's benefits
B. A project's benefits are lower or equal to the project's costs in
terms of present worth
C. A project's benefits are higher than the project's costs in terms of
present worth
D. The present worth of a project is equal to zero
E. The present worth of a project is positive.

, Answer: The present worth of a project is equal to zero


◉ WHICH OF THE FOLLOWING STATEMENTS IS CORRECT?
A. To account for tax effects it is necessary to multiply first cost by
the CTF
B. To account for tax effects it is necessary to multiply first cost by
one minus capital tax factor
C. To account for tax effects it is necessary to multiply annual savings
by the capital tax factor
D. To account for tax effects it is necessary to multiply annual
savings by one minus capital tax factor
E. To account for tax effects it is necessary to multiply salvage value
by the capital tax factor.
Answer: To account for tax effects it is necessary to multiply first
cost by the CTF


◉ IN GENERAL, AN INCREASE IN SALVAGE VALUE, ________ AND AN
INCREASE IN THE INTEREST RATE _____ THE PRESENT WORTH OF
A PROJECT.
A. Increases, decreases
B. Does not affect, decreases
C. Decreases, increases
D. Increases, increases
E. Decreases, decreases.