Finance MCQs

Page No. 24

Number of years forecasted to recover an original investment is classified as________?


aPayback period


b Forecasted period


cOriginal period


dInvestment period


View Answer Payback period

Process in which managers of company identify projects to add value is classified as__________?


aCapital budgeting


bCost budgeting


cBook value budgeting


dEquity budgeting


View Answer Capital budgeting

Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be_________?


aNegative


bZero


cPositive


dIndependent


View Answer Zero

Other factors held constant, greater project liquidity is because of___________?


aLess project returns


bGreater project return


cShorter payback period


dGreater payback period



An internal rate of return in capital budgeting can be modified to make it representative of_________?


a Relative outflow


b Relative inflow


cRelative cost


dRelative profitability



Situation in which firm limits expenditures on capital is classified as________?


a Optimal rationing


b Capital rationing


cMarginal rationing


dTransaction rationing


View Answer Capital rationing

Cash flows occurring with more than one change in sign of cash flow are classified as________?


aNon-normal cash flow


bNormal cash flow


cNormal costs


dNon-normal costs


View Answer Non-normal costs

If net present value is positive, then profitability index will be__________?


aGreater than two


bEqual to


cLess than one


dGreater than one


View Answer Greater than one

Sum of discounted cash flows is best defined as____________?


aTechnical equity


bDefined future value


cProject net present value


d Equity net present value



Cash outflows are costs of project and are represented by___________?


aNegative numbers


bPositive numbers


cHurdle number


dRelative number


View Answer Negative numbers

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