Financial Management
531. Process of Financial Planning ends with:
- Preparation of Projected Statements
- Preparation of Actual Statements
- Comparison of Actual with Projected
- Ordering the employees that projected figures m come true
Correct answer: (C)
Comparison of Actual with Projected
532. A sound Capital Budgeting technique is based on:
- Cash Flows
- Accounting Profit
- Interest Rate on Borrowings
- Last Dividend Paid
Correct answer: (A)
Cash Flows
533. Which of the following is not followed in capital budgeting?
- Cash flows Principle
- Interest Exclusion Principle
- Accrual Principle
- Post-tax Principle
Correct answer: (C)
Accrual Principle
534. A proposal is not a Capital Budgeting proposal if it:
- is related to Fixed Assets
- brings long-term benefits
- brings short-term benefits only
- has very large investment
Correct answer: (C)
brings short-term benefits only
535. Feasibility Set Approach to Capital Rationing can be applied in:
- Accept-Reject Situations
- Divisible Projects
- Mutually Exclusive Projects
- None of the above
Correct answer: (A)
Accept-Reject Situations
536. If the Money Discount Rate is 19% and Inflation Rate is 12%, then the Real Discount Rate is:
- 7%
- 5%
- 5.70%
- 6.25%
Correct answer: (D)
6.25%
537. Risk in Capital budgeting implies that the decision-maker knows ________________ of the cash flows.
- Variability
- Probability
- Certainty
- None of the above
Correct answer: (B)
Probability
538. Which element of the basic NPV equation is adjusted by the RADR?
- Denominator
- Numerator
- Both
- None
Correct answer: (A)
Denominator
539. Which of the following has the highest cost of capital?
- Equity shares
- Loans
- Bonds
- Preference shares
Correct answer: (A)
Equity shares
540. In case the firm is all-equity financed, WACC would be equal to
- Cost of Debt
- Cost of Equity
- Neither (a) nor
- (d) Both (a) and (b)
Correct answer: (B)
Cost of Equity