Since capital budgeting uses cash flows instead of accounting flows, the financial manager must add back _____________ to the analysis.
The cost of fixed assets
The cost of accounts payable
Investments
Depreciation
Question # 14 of 15 ( Start time: 04:49:35 PM ) Total Marks: 1
Which of the following is a main purpose of the Sensitivity Analysis?
To find out the optimal level of capital budget.
To find out that how price changes affect break-even volume.
To find out the seasonal variation in product demand.
To find out that how variables in a project affect profitability
Question # 13 of 15 ( Start time: 04:48:39 PM ) Total Marks: 1
If you invest Rs.400 today in a savings account paying 8 percent interest per year, how much will you have in the account at the end of three years if the interest is compounded annually?
Rs.325
Rs.1,299
Rs.504
Rs.609
Question # 12 of 15 ( Start time: 04:48:00 PM ) Total Marks: 1
If an investor buys a non-zero coupon bond and holds it to maturity, then the rate of return she will receive depends on:
Select correct option:
The bond's maturity value.
The price paid for the bond
The interest payments to be received.
All of the given options
Question # 11 of 15 ( Start time: 04:47:38 PM ) Total Marks: 1
Which of the following changes will increase the Net Present Value (NPV ) of a project?
A decrease in the discount rate
A decrease in the size of the cash inflows
An increase in the initial cost of the project
A decrease in the number of cash inflows
Question # 10 of 15 ( Start time: 04:46:37 PM ) Total Marks: 1
Suppose you need the present value interest factor for 12 percent compounded quarterly for 10 years. If all you have is a PVIF table, you would use the ________ period row and the ________ percent rate column.
40, 12
20, 12
40, 3
20, 6
Question # 9 of 15 ( Start time: 04:46:15 PM ) Total Marks: 1
Which of the following focuses on long-term decision-making regarding the acquisition of projects?
Working Capital Management
Capital Budgeting
Cash Budgeting
None of the given options
Question # 8 of 15 ( Start time: 04:45:39 PM ) Total Marks: 1
Which of the following bonds will have the greatest percentage increase in value if all interest rates decrease by 1 percent?
20-year, zero coupon bond.
10-year, zero coupon bond.
20-year, 10 percent coupon bond
20-year, 5 percent coupon bond.
Question # 7 of 15 ( Start time: 04:45:03 PM ) Total Marks: 1
If two projects offer the same, positive NPV, then which of the following would be a reasonable conclusion?
The projects would have the same IRR.
The projects would have the same payback period.
The projects are mutually exclusive.
The projects would add the same amount to the value of the firm.
Question # 6 of 15 ( Start time: 04:44:37 PM ) Total Marks: 1
Which of the following method of stock evaluation tries to predict the future movement of a stock based on past data?
Trend analysis
Fundamental analysis
Horizontal analysis
Vertical analysis
Question # 5 of 15 ( Start time: 04:37:51 PM ) Total Marks: 1
In which of the following situations market price of a security will move up?
When market price of the security is above the intrinsic value of the security
When market price of the security is equal to the intrinsic value of the security
When market value of the security is equal to the face value of the security
When market price of the security is below the intrinsic value of the security
Question # 4 of 15 ( Start time: 04:36:47 PM ) Total Marks: 1
You plan to deposit Rs.400 at the end of each year for 16 years in an account that pays 9 percent compounded annually. The terminal value at the end of the 16 year period is closest to:
Rs.13,201
Rs.17,667
Rs.9,634
Rs.19,329.
Question # 3 of 15 ( Start time: 04:35:47 PM ) Total Marks: 1
Which one of the following statements is TRUE regarding future value of a single sum?
Increase if the interest rate increases.
Remains unchanged if the interest rate changes
Decrease if the interest rate increases
All of the given options are correct.
Question # 2 of 15 ( Start time: 04:34:42 PM ) Total Marks: 1
A company has fixed costs of $50,000 and variable costs per unit of output of $8. If its sole product sells for $18, what is the break-even quantity of output?
2,500
5,000
1,500
7,500
Question # 1 of 15 ( Start time: 04:34:00 PM ) Total Marks: 1
The decision rule for net present value is to:
Accept all projects with cash inflows exceeding initial cost.
Reject all projects with rates of return exceeding the opportunity cost of capital.
Accept all projects with positive net present values.
Reject all projects lasting longer than 10 years.
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