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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