Description : The basic capital budgeting principles involved in determining relevant after-tax incremental operating cash flows require us to . A. include sunk costs, but ignore opportunity costs B. include ... C. ignore both opportunity costs and sunk costs D. include both opportunity and sunk costs
Last Answer : B. include opportunity costs, but ignore sunk costs
Description : In proper capital budgeting analysis we evaluate incremental cash flows. A. accounting B. operating C. before-tax D. financing
Last Answer : B. operating
Description : A sound capital budgeting technique is based on: A. Cash Flows B. Accounting Profit C. Interest rate on borrowings D. Last dividend paid
Last Answer : A. Cash Flows
Description : Which of the following is not used in capital budgeting? A. B. C. D. Time Value of Money Sensitivity Analysis Net Assets Value Method Cash Flows
Last Answer : Net Assets Value Method
Description : Which of the following is least likely to be part of the calculation of the terminal- year incremental net cash flow for an energy-related expansion project? A. An initial working capital ... Disposal/reclamation costs C. Capitalized expenditures D. Salvage value of any sold or disposed assets
Last Answer : D. Salvage value of any sold or disposed assets
Description : Which of the following is not followed in capital budgeting? A. Cash flows principle B. Interest exclusion principle C. Accrual principle D. Post tax principle
Last Answer : C. Accrual principle
Description : All of the following influence capital budgeting cash flows except . A. choice of depreciation method for tax purposes B. economic length of the project C. projected sales (revenues) for the project
Last Answer : B. economic length of the project
Description : The estimated benefits from a capital budgeting project are expected as cash flows rather than income flows because . A. it is more difficult to calculate income flows than cash flows B. it ... is central to the firm's capital budgeting decision C. this is required by the accounting profession
Last Answer : B. it is cash, not accounting income, that is central to the firm's capital budgeting decision
Description : Capital budgeting decisions are: A. Reversible B. Irreversible C. Unimportant D. All of the above
Last Answer : B. Irreversible
Description : Risk in capital budgeting implies that the decision maker knows _ of the cash flows. A. Variability B. Certainty C. Probability D. None of these
Last Answer : C. Probability
Description : You must decide between two mutually exclusive projects. Project A has cash flows of - Rs.10,000; Rs.5,000; Rs.5,000; and Rs.5,000; for years 0 through 3, respectively. Project B has cash flows of -Rs ... B's NPV > Project A's NPV. D. Neither A nor B; The NPVs of both projects are negative.
Last Answer : C. B; Project B's NPV > Project A's NPV.
Description : To the nearest rupee, what is the net present value of a replacement project whose cash flows are -Rs.104,000; Rs.34,444; Rs.39,877; Rs.25,000; and Rs.52,800 for years 0 through 4, respectively? The firm has decided to ... -free rate is 6%. A. Rs.15,115 B. Rs.26,798 C. Rs.33,346 D. Rs.48,121
Last Answer : C. Rs.33,346
Description : Assume that a firm has accurately calculated the net cash flows relating to two mutua lly exclusive investment proposals. If the net present value of both proposals exceed zero and the firm is ... maximize shareholder wealth and, since the projects are mutually exclusive, we can only take one
Last Answer : D. accept the proposal that has the largest NPV since the goal of the firm is to maximize shareholder wealth and, since the projects are mutually exclusive, we can only take one
Description : The payback period is the period A. a project takes to pay back the loan taken to purchase the capital assets B. equal to the useful life of the machines C. a project takes to recover its initial cash outflow D. over which the project will be getting operating cash inflows
Last Answer : C. a project takes to recover its initial cash outflow
Description : Risk, as it relates to working capital, means that there is jeopardy to the firm for not maintaining sufficient current assets to . A. meet its cash obligations as they occur and take advantage ... above industry norms E. meet its cash obligations as they occur and support the proper level of
Last Answer : D. maintain current and acid-test ratios at or above industry norms
Description : ___________ can be used as a standard to measure the efficiency of an economy 1. Cash reserve ratio 2. Exchange rate ratio 3. Incremental capital output ratio 4. Profit ratio 5. None of these
Last Answer : Incremental capital output ratio
Description : Interest payments, principal payments, and cash dividends are the typical budgeting cash-flow analysis because they are A. included in; financing B. excluded from; financing C. included in; operating D. excluded from; operating
Last Answer : C. included in; operating
Description : Which of the following is true regarding NPV? A. NPV assumes reinvestment at the cost of capital. B. NPV decisions should be made based on the highest value for all the selections. C. NPV assumes reinvestment at the prevailing rate. D. NPV assumes reinvestment at the NPV rate.
Last Answer : A. NPV assumes reinvestment at the cost of capital.
Description : Which of the following is not a relevant cost in capital budgeting? A. Sunk Cost B. Opportunity cost C. Allocated overheads D. Both (a) and (c) above
Last Answer : D. Both (a) and (c) above
Description : Which of the following is not a capital budgeting decision? A. Expansion programme B. Merger C. Replacement of an Asset D. Inventory Level
Last Answer : D. Inventory Level
Description : Which of the following is not incorporated in capital budgeting? A. Tax effect B. Time Value of Money C. Required rate of return D. Rate of cashdiscount
Last Answer : D. Rate of cashdiscount
Description : Capital budgeting is a part of: A. Investment decision B. Working capital management C. Marketing management D. Capital structure
Last Answer : A. Investment decision
Description : B) Scheme for Sustainable Structuring of Stressed Assets Explanation: Under a new ‗Scheme for Sustainable Structuring of Stressed Assets (S4A), RBI allowed banks to take equity in debt ... loans of struggling companies into sustainable and unsustainable based on the cash flows of the projects.
Last Answer : Which bank has launched India‟s first certified green bond at London Stock Exchange (LSE)? A) State Bank of India B) Bank of Baroda C) ICICI Bank D) Axis Bank E) None of these
Description : What is a cash flow table in project management? A. A table portraying inflow of cash in a project B. A table portraying outgoing expenses of a project C. It is the tool that is used ... inflows and outflows down, usually on a monthly basis D. A table portraying debts taken for a project
Last Answer : C. It is the tool that is used to study such cash flows by breaking inflows and outflows down, usually on a monthly basis
Description : Which of the following does not affect cash flows from a proposal: A. Salvage value B. Depreciation amount C. Tax rate change D. Method of project financing
Last Answer : D. Method of project financing
Description : Which of the following statements is incorrect regarding a normal project? A. If the NPV of a project is greater than 0, then its PI will exceed 1. B. If the IRR of a project is 8%, its NPV, using ... the IRR of a project is greater than the discount rate, k, then its PI will be greater than 1.
Last Answer : D. If the IRR of a project is greater than the discount rate, k, then its PI will be greater than 1.
Description : How can a firm provide a margin of safety if it cannot borrow on short notice to meet its needs? A. Maintain a low level of current assets (especially cash and marketable securities) ... the level of fixed assets (especially plant and equipment D. Lengthening the maturity schedule of financing
Last Answer : D. Lengthening the maturity schedule of financing
Description : Unlike traditional Work Breakdown Structures (WBS), evolutionary WBSs are a. organized in a standard manner across all projects b. created in an iterative and incremental manner c. designed so one can compare the current project to past projects d. all of the above e. none of the above
Last Answer : d. all of the above
Description : Net working capital refers to A. total assets minus fixed assets B. current assets minus current liabilities C. current assets minus inventories D. current
Last Answer : B. current assets minus current liabilities
Description : Identify the incorrect statement in connection with working capital management. A. Long-term funds are more expensive than short-term funds but also riskier B. The objectives of ... fluctuating current assets E. Aggressive financing policies increase profitability at the cost of higher risk
Last Answer : A. Long-term funds are more expensive than short-term funds but also riskier
Description : Which of the following statements relating to working capital financing is not correct? A. An aggressive policy uses long-term debt to finance fluctuating current assets B. Long-term debt ... . The matching principle indicates that fluctuating current assets should be financed by short-term debt
Last Answer : A. An aggressive policy uses long-term debt to finance fluctuating current assets
Description : Having defined working capital as current assets, it can be further classified according to . A. financing method and time B. rate of return and financing method C. time and rate of return D. components & time
Last Answer : D. components & time
Description : The amount of current assets that varies with seasonal requirements is referred to as working capital. A. permanent B. net C. temporary D. gross
Last Answer : C. temporary
Description : The amount of current assets required to meet a firm's long-term minimum needs is referred to as working capital. A. permanent B. temporary C. net D. gross
Last Answer : A. permanent
Description : Which of the following statements is most correct? A. For small companies, long-term debt is the principal source of external financing. B. Current assets of the typical manufacturing firm account ... the financial manager to make a decision and not address the issue again for several months.
Last Answer : B. Current assets of the typical manufacturing firm account for over half of its total assets.
Description : To financial analysts, "working capital" means the same thing as . A. Total assets B. fixed assets C. current assets D. current assets minus current liabilities.
Last Answer : C. current assets
Description : Which of the following illustrates the use of a hedging approach to financing assets? A. Temporary current assets financed with long-term liabilities. B. Permanent working capital financed with long-term ... equity D. All assets financed with a mixture of 50% equity and 50% long-term debt
Last Answer : B. Permanent working capital financed with long-term liabilities.
Description : Which of the following statements is true of Insured Asset Allocation? A. It is aimed at benefiting from short-term under pricing and over pricing of assets. B. In this strategy the risk ... . It is a strategy aimed at achieving the objectives of the investor without depending on market timing
Last Answer : E. It is a strategy aimed at achieving the objectives of the investor without depending on market timing.
Description : Following is(are) the responsibility(ies) of the project manager. (A) Budgeting and cost control (B) Allocating resources (C) Tracking project expenditure
Last Answer : (C) Tracking project expenditure
Description : Following is(are) the responsibility(ies) of the project manager. (A)Budgeting and cost control (B)Allocating resources (C)Tracking project expenditure (D)All of the above
Last Answer : (D)All of the above
Description : Cost budgeting can be best described by which of the following? 1. The process of developing the future trends along with the assessment of probabilities, uncertainties, and inflation that could ... of gathering, accumulating, analyzing, reporting, and managing the costs on an on- going basis
Last Answer : 3. The process of establishing budgets, standards, and a monitoring system by which the investment cost of the project can be measured and managed
Description : A time-phased budget that project managers use to measure and monitor cost performance. A. Cost Baseline B. Cost Budgeting C. Cost Estimating D. Cost Variance
Last Answer : A. Cost Baseline
Description : Net Present Value of a machine is A. PV of cash inflows less cost of investment B. PV of cash inflows ÷ cost of investment C. PV of net profit after tax less cost of investment D.PV of cash inflows less average cost of investment
Last Answer : A. PV of cash inflows less cost of investment
Description : Epx = Percentage change in Qy / Percentage change in Px The above relationship is : A.Arc Cross Price Elasticity B.Cost Output C.Cost Profit D.Capital Budgeting
Last Answer : A.Arc Cross Price Elasticity
Description : Trend analysis is significant for a) Forecasting and budgeting b) Profit planning c) Capital rationing d) None of the above
Last Answer : a) Forecasting and budgeting
Description : The return available by investing the capital elsewhere is known as (A) profit rate (B) discount rate (C) opportunity cost (D) return on investment
Last Answer : (C) opportunity cost
Description : MM Model of Dividend irrelevance uses arbitrage between : A. Dividend and Bonus B. Dividend and Capital Issue C. Profit and Investment D. None of the
Last Answer : B. Dividend and Capital Issue
Description : Which of the following is true? A. Discounted cash flow analysis is the least precise of the cash flow techniques, because it does not consider the time value of money. B. NPV is ... least precise of the cash flow analysis techniques, because it assumes reinvestment at the cost of capital.
Last Answer : C. Payback period is the least precise of the cash flow analysis techniques, because it does not consider the time value of money.
Description : Identify which technique will not help a company to optimise its working capital cycle. A. Offering discounts for early payment by debtors B. Using cash management models to optimise the level of ... order quantity model to stock management E. Adopting the use of just-in-time stock management
Last Answer : B. Using cash management models to optimise the level of cash held
Description : Which of the following statements is correct regarding the internal rate of return (IRR) method? A. Each project has a unique internal rate of return. B. As long as you are not dealing with ... of return is rarely used by firms today because of the ease at which net present value is calculated
Last Answer : D. The internal rate of return is rarely used by firms today because of the ease at which net present value is calculated.