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MCQs

Cash Flow Statement

Total Questions : 118 | Page 12 of 12 pages
Question 111. The profitability index in capital budgeting is used for
  1.    negative projects
  2.    relative projects
  3.    evaluate projects
  4.    earned projects
 Discuss Question
Answer: Option C. -> evaluate projects
Answer: (c).evaluate projects
Question 112. Other factors held constant, the greater project liquidity is because of
  1.    less project return
  2.    greater project return
  3.    shorter payback period
  4.    greater payback period
 Discuss Question
Answer: Option C. -> shorter payback period
Answer: (c).shorter payback period
Question 113. In calculation of internal rate of return, an assumption states that received cash flow from the project must
  1.    be reinvested
  2.    not be reinvested
  3.    be earned
  4.    not be earned
 Discuss Question
Answer: Option A. -> be reinvested
Answer: (a).be reinvested
Question 114. The sum of discounted cash flows is best defined as
  1.    technical equity
  2.    defined future value
  3.    project net present value
  4.    equity net present value
 Discuss Question
Answer: Option C. -> project net present value
Answer: (c).project net present value
Question 115. The cash outflows are the costs of project and are represented by
  1.    negative numbers
  2.    positive numbers
  3.    hurdle number
  4.    relative number
 Discuss Question
Answer: Option A. -> negative numbers
Answer: (a).negative numbers
Question 116. The life that maximizes net present value of an asset is classified as
  1.    minimum life
  2.    present value life
  3.    economic life
  4.    transaction life
 Discuss Question
Answer: Option C. -> economic life
Answer: (c).economic life
Question 117. If two independent projects having hurdle rate then both projects should
  1.    be accepted
  2.    not be accepted
  3.    have capital acceptance
  4.    have return rate acceptance
 Discuss Question
Answer: Option A. -> be accepted
Answer: (a).be accepted
Question 118. In capital budgeting, two projects having cost of capital as 12% is classified as
  1.    hurdle rate
  2.    capital rate
  3.    return rate
  4.    budgeting rate
 Discuss Question
Answer: Option A. -> hurdle rate
Answer: (a).hurdle rate

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