Finance MCQs

Page No. 30

In capital budgeting, positive net present value results in_________________?


aNegative economic value added


bPositive economic value added


cZero economic value added


dPercent economic value added



Life that maximizes net present value of an asset is classified as__________?


aMinimum life


bPresent value life


cEconomic life


dTransaction life


View Answer Economic life

First step in calculation of net present value is to find out_________?


aPresent value of equity


bFuture value of equity


cPresent value cash flow


dFuture value of cash flow



Present value of future cash flows is divided by an initial cost of project to calculate_______?


aNegative index


bExchange index


cProject index


dProfitability index


View Answer Profitability index

An uncovered cost at start of year is $200, full cash flow during recovery year is $400 and prior years to full recovery is 3 then payback would be__________?


a5 years


b3.5 years


c4 years


d4.5 years


View Answer 3.5 years

Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is considered as____________?


aValued relationship


bEconomic relationship


cDirect relationship


dInverse relationship


View Answer Direct relationship

Profitability index in capital budgeting is used for_________?


aNegative projects


bRelative projects


cEvaluate projects


dEarned projects


View Answer Evaluate projects

In mutually exclusive projects, project which is selected for comparison with others must have____________?


aHigher net present value


bLower net present value


cZero net present value


dAll of above



A project whose cash flows are more than capital invested for rate of return then net present value will be___________?


aPositive


bIndependent


cNegative


dZero


View Answer Positive

An equity multiplier is multiplied to return on assets to calculate_________?


aReturn on assets


bReturn on multiplier


cReturn on turnover


dReturn on stock


View Answer Return on assets

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