Basics Of Capital Budgeting Evaluating Cash Flows MCQs

Option A: evaluate cash flow

Option B: evaluate projects

Option C: evaluate budgeting

Option D: evaluate equity

Correct Answer: evaluate projects ✔

Option A: project net gain

Option B: independent projects

Option C: dependent projects

Option D: net value projects

Correct Answer: independent projects ✔

Option A: negative

Option B: zero

Option C: positive

Option D: independent

Correct Answer: negative ✔

Option A: 0.0319

Option B: 3.19

Option C: 0.31 times

Option D: 5450

Correct Answer: 0.0319 ✔

Option A: hurdle number

Option B: relative number

Option C: negative numbers

Option D: positive numbers

Correct Answer: positive numbers ✔

Option A: rise in marginal cost of capital

Option B: fall in marginal cost of capital

Option C: rise in transaction cost of capital

Option D: rise in transaction cost of capital

Correct Answer: rise in marginal cost of capital ✔

Option A: 25000

Option B: 28000

Option C: 33600

Option D: 30000

Correct Answer: 33600 ✔

Option A: maximum capital budget

Option B: greater capital budget

Option C: optimal capital budget

Option D: minimum capital budget

Correct Answer: optimal capital budget ✔

Option A: net present value method

Option B: net future value method

Option C: net capital budgeting method

Option D: net equity budgeting method

Correct Answer: net present value method ✔

Option A: terminal value

Option B: existed value

Option C: quit value

Option D: relative value

Correct Answer: terminal value ✔

Option A: normal costs

Option B: non-normal costs

Option C: non-normal cash flow

Option D: normal cash flow

Correct Answer: non-normal cash flow ✔

Option A: negative numbers

Option B: positive numbers

Option C: hurdle number

Option D: relative number

Correct Answer: negative numbers ✔

Option A: be accepted

Option B: not be accepted

Option C: have capital acceptance

Option D: have return rate acceptance

Correct Answer: be accepted ✔

Option A: minimum life

Option B: present value life

Option C: economic life

Option D: transaction life

Correct Answer: economic life ✔

Option A: technical equity

Option B: defined future value

Option C: project net present value

Option D: equity net present value

Correct Answer: project net present value ✔

Option A: present value consent

Option B: mutually exclusive

Option C: mutual project

Option D: mutual consent

Correct Answer: mutually exclusive ✔

Option A: present value of equity

Option B: future value of equity

Option C: present value cash flow

Option D: future value of cash flow

Correct Answer: present value cash flow ✔

Option A: non-normal cash flow

Option B: normal cash flow

Option C: normal costs

Option D: non-normal costs

Correct Answer: non-normal cash flow ✔

Option A: greater than two

Option B: equal to

Option C: less than one

Option D: greater than one

Correct Answer: greater than one ✔

Option A: negative index

Option B: exchange index

Option C: project index

Option D: profitability index

Correct Answer: profitability index ✔

Option A: abnormal costs

Option B: normal cash flows

Option C: abnormal cash flow

Option D: normal costs

Correct Answer: normal cash flows ✔

Option A: 8200

Option B: 16000

Option C: 0.0064

Option D: 1562.5

Correct Answer: 16000 ✔

Option A: optimal rationing

Option B: capital rationing

Option C: marginal rationing

Option D: transaction rationing

Correct Answer: capital rationing ✔

Option A: relative outflow

Option B: relative inflow

Option C: relative cost

Option D: relative profitability

Correct Answer: ✔

Option A: one

Option B: multiple

Option C: accepted

Option D: non-accepted

Correct Answer: multiple ✔

Option A: be reinvested

Option B: not be reinvested

Option C: be earned

Option D: not be earned

Correct Answer: be reinvested ✔

Option A: less project return

Option B: greater project return

Option C: shorter payback period

Option D: greater payback period

Correct Answer: shorter payback period ✔

Option A: negative projects

Option B: relative projects

Option C: evaluate projects

Option D: earned projects

Correct Answer: evaluate projects ✔

Option A: 0.55

Option B: 1.82

Option C: 0.55

Option D: 0.0182

Correct Answer: 1.82 ✔

Option A: negative

Option B: zero

Option C: positive

Option D: independent

Correct Answer: zero ✔

Option A: 3.46 years

Option B: 2.46 years

Option C: 5.46 years

Option D: 4.46 years

Correct Answer: 4.46 years ✔

Option A: negative internal rate of return

Option B: modified internal rate of return

Option C: existed internal rate of return

Option D: relative rate of return

Correct Answer: modified internal rate of return ✔

Option A: capital budgeting

Option B: cost budgeting

Option C: book value budgeting

Option D: equity budgeting

Correct Answer: capital budgeting ✔

Option A: long-term bonds

Option B: short-term bonds

Option C: internal term bonds

Option D: external term bonds

Correct Answer: long-term bonds ✔

Option A: payback period

Option B: forecasted period

Option C: original period

Option D: investment period

Correct Answer: payback period ✔

Option A: zero economic value added

Option B: percent economic value added

Option C: negative economic value added

Option D: positive economic value added

Correct Answer: negative economic value added ✔

Option A: greater annual annuity method

Option B: equivalent annual annuity

Option C: lesser annual annuity method

Option D: zero annual annuity method

Correct Answer: equivalent annual annuity ✔

Option A: discounted payback period

Option B: discounted rate of return

Option C: discounted cash flows

Option D: discounted project cost

Correct Answer: discounted payback period ✔

Option A: positive

Option B: negative

Option C: zero

Option D: one

Correct Answer: positive ✔

Option A: costs

Option B: cash flows

Option C: internal rate of return

Option D: external rate of return

Correct Answer: internal rate of return ✔

Option A: optimal capital budget

Option B: minimum capital budget

Option C: maximum capital budget

Option D: greater capital budget

Correct Answer: optimal capital budget ✔

Option A: p.v of hurdle rate

Option B: fv of hurdle rate

Option C: p.v of terminal value

Option D: fv of terminal value

Correct Answer: ✔

Option A: net loss profile

Option B: net gain profile

Option C: net future value profile

Option D: net present value profile

Correct Answer: net present value profile ✔

Option A: external return method

Option B: net present value of method

Option C: net future value method

Option D: internal return method

Correct Answer: net present value of method ✔

Option A: positive rate of return

Option B: negative rate of return

Option C: external rate of return

Option D: internal rate of return

Correct Answer: internal rate of return ✔

Option A: cash flow decision

Option B: cost decision

Option C: same decisions

Option D: different decisions

Correct Answer: same decisions ✔

Option A: external rate of return

Option B: internal rate of return

Option C: positive rate of return

Option D: negative rate of return

Correct Answer: internal rate of return ✔

Option A: shorter payback period

Option B: greater payback period

Option C: less project return

Option D: greater project return

Correct Answer: greater payback period ✔

Option A: transaction approach

Option B: replacement chain approach

Option C: common life approach

Option D: Both B and C

Correct Answer: Both B and C ✔

Option A: original period

Option B: investment period

Option C: payback period

Option D: forecasted period

Correct Answer: payback period ✔

Option A: negative economic value added

Option B: positive economic value added

Option C: zero economic value added

Option D: percent economic value added

Correct Answer: positive economic value added ✔

Option A: 5 years

Option B: 3.5 years

Option C: 4 years

Option D: 4.5 years

Correct Answer: 5 years ✔

Option A: valued relationship

Option B: economic relationship

Option C: direct relationship

Option D: inverse relationship

Correct Answer: direct relationship ✔

Option A: higher net present value

Option B: lower net present value

Option C: zero net present value

Option D: all of the above

Correct Answer: higher net present value ✔

Option A: positive

Option B: independent

Option C: negative

Option D: zero

Correct Answer: positive ✔

Option A: Project net gain

Option B: Independent projects

Option C: Dependent projects

Option D: Net value projects

Correct Answer: Independent projects ✔

Option A: Evaluate cash flow

Option B: Evaluate projects

Option C: Evaluate budgeting

Option D: Evaluate equity

Correct Answer: Evaluate projects ✔

Option A: Hurdle number

Option B: Relative number

Option C: Negative numbers

Option D: Positive numbers

Correct Answer: Positive numbers ✔

Option A: Normal costs

Option B: Non-normal costs

Option C: Non-normal cash flow

Option D: Normal cash flow

Correct Answer: Non-normal cash flow ✔

Option A: Be accepted

Option B: Not be accepted

Option C: Have capital acceptance

Option D: Have return rate acceptance

Correct Answer: Be accepted ✔

Option A: Terminal value

Option B: Existed value

Option C: Quit value

Option D: Relative value

Correct Answer: Terminal value ✔

Option A: Negative economic value added

Option B: Positive economic value added

Option C: Zero economic value added

Option D: Percent economic value added

Correct Answer: Positive economic value added ✔

Option A: Minimum life

Option B: Present value life

Option C: Economic life

Option D: Transaction life

Correct Answer: Economic life ✔

Option A: Present value of equity

Option B: Future value of equity

Option C: Present value cash flow

Option D: Future value of cash flow

Correct Answer: Present value cash flow ✔

Option A: Negative index

Option B: Exchange index

Option C: Project index

Option D: Profitability index

Correct Answer: Profitability index ✔

Option A: 5 years

Option B: 3.5 years

Option C: 4 years

Option D: 4.5 years

Correct Answer: 5 years ✔

Option A: Valued relationship

Option B: Economic relationship

Option C: Direct relationship

Option D: Inverse relationship

Correct Answer: Direct relationship ✔

Option A: Negative projects

Option B: Relative projects

Option C: Evaluate projects

Option D: Earned projects

Correct Answer: Evaluate projects ✔

Option A: Higher net present value

Option B: Lower net present value

Option C: Zero net present value

Option D: All of above

Correct Answer: Higher net present value ✔

Option A: Positive

Option B: Independent

Option C: Negative

Option D: Zero

Correct Answer: Positive ✔