INSTRUCTOR WITH MULTI-ENG STUDENT HAS ENG PROBS AT LOW ALT.

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I WAS PERFORMING A 'STAGE CHK' FOR A JAPANESE NATIONAL CANDIDATE FOR THE COMMERCIAL MULTI-ENG RATING. THE STAGE CHK WAS TO DETERMINE IF THE CANDIDATE WAS READY FOR THE CHKRIDE. THE CANDIDATE HAD ABOUT 20-30 HRS OF MULTI-ENG TRAINING TIME. BEING A JAPANESE NATIONAL; HE SPOKE ENGLISH WITH AN ACCENT. HOWEVER; PRIOR TO TKOF; I DETERMINED THAT WE COULD UNDERSTAND EACH OTHER. ENRTE TO WHEELER ARMY AIRFIELD; I THOUGHT THE CANDIDATE TOLD ME THAT HE WAS GOING TO CLB TO 3500 FT. UPON REACHING ALT; HE RPTED '3500 FT.' A FEW MINS LATER; I QUICKLY GLANCED AT THE ALTIMETER AND SAW THAT WE WERE STILL IN A CLB TO WHAT I INITIALLY THOUGHT WAS 3900 FT. AT THIS TIME; I TURNED OFF THE FUEL TO THE R ENG AND EXPECTED THE CANDIDATE TO RECOVER AND RESTART THE ENG. HOWEVER; I THEN NOTICED THAT WE APPEARED TO BE LOWER THAN NORMAL. I CHKED THE ALTIMETER AND NOTED TO MY DISMAY THAT WE WERE AT 2800 FT. WHAT HAD HAPPENED WAS THE JAPANESE CANDIDATE; WHO SPOKE WITH AN ACCENT; HAD TOLD ME THAT HE WAS GOING TO CLB TO 2500 FT; NOT 3500 FT AS I HAD BELIEVED HE HAD SAID. UNFORTUNATELY; HIS '2' AND '3' NUMBERS SOUNDED VERY SIMILAR; ESPECIALLY THROUGH OUR HEADSETS. I HAD SIMPLY ASSUMED THAT WE WERE AT 3500 FT AND MISREAD THE ALTIMETER IN MY QUICK GLANCE. THE CANDIDATE APPEARED TO BE CONFUSED IN IDENTING AND SECURING THE 'DEAD' R ENG. HE FEATHERED THE CORRECT R ENG BUT THEN FOLLOWED THIS WITH THE MISTAKE OF THROTTLING BACK THE 'GOOD' L ENG. THIS LOSS OF PWR CAUSED THE ACFT TO RAPIDLY DSND. I IMMEDIATELY PUSHED THE THROTTLE BACK IN BUT WE HAD ALREADY LOST A LOT OF ALT. AFTER REPEATEDLY GIVING INSTRUCTIONS; IT APPEARED THAT THE CANDIDATE WAS TOTALLY CONFUSED AND NOT ABLE TO COMPLY. I TOOK OVER THE CTLS; TURNED TO THE FIELD AND SET UP FOR AN EMER LNDG AT WHEELER. I WAS ABLE TO MAINTAIN ALT AND CONTINUED TO TRY TO START THE ENG. WHILE ON EXTENDED L BASE TO THE RWY; WE WERE ABLE TO GET THE R ENG TO RESTART. WE ENTERED A CLB AND CONTINUED OUR FLT. THE REST OF THE FLT WAS UNEVENTFUL. I LEARNED SEVERAL THINGS FROM THIS FLT. I WILL ALWAYS CHK AND RECHK THE ALTIMETER AND OUTSIDE VISUAL CUES BEFORE SHUTTING DOWN THE ENG. PART OF MY PROB WAS THAT I HAD THOUGHT I HEARD SOMETHING (IE; 3500 FT VERSUS 2500 FT) AND ASSUMED IT WAS CORRECT. I DID NOT REALLY CHK THE ALTIMETER AND OUTSIDE VISUAL CUES TO VERIFY THE INFO. THE NEXT MISTAKE I MADE WAS WAITING TOO LONG BEFORE TAKING CTL OF THE ACFT. DESPITE REPEATED INSTRUCTIONS FROM ME; THE CANDIDATE WAS UNABLE TO PERFORM THE REQUIRED PROC AND IN FACT; CONTRIBUTED TO OUR DSCNT. I SHOULD HAVE NOT WAITED UNTIL WE LOST VALUABLE ALT AND SHOULD HAVE INITIATED CORRECTIVE ACTION MUCH SOONER.