Financial Management
381. In case of divisible projects, which of the following can be used to attain maximum NPV?
- Feasibility Set Approach
- Internal Rate of Return
- Profitability Index Approach
- Any of the above
Correct answer: (C)
Profitability Index Approach
382. If the Real rate of return is 10% and Inflation s Money Discount Rate is:
- 14.4%
- 2.5%
- 25%
- 14%
Correct answer: (A)
14.4%
383. Risk of a Capital budgeting can be incorporated
- Adjusting the Cash flows
- Adjusting the Discount Rate
- Adjusting the life
- All of the above
Correct answer: (D)
All of the above
384. Which of the following cost of capital require tax adjustment?
- Cost of Equity Shares
- Cost of Preference Shares
- Cost of Debentures
- Cost of Retained Earnings
Correct answer: (C)
Cost of Debentures
385. Firm's Cost of Capital is the average cost of:
- All sources
- All borrowings
- Share capital
- Share Bonds & Debentures
Correct answer: (A)
All sources
386. In order to calculate the proportion of equity financing used by the company, the following should be used:
- Authorised Share Capital
- Equity Share Capital plus Reserves and Surplus
- Equity Share Capital plus Preference Share Capital
- Equity Share Capital plus Long-term Debt
Correct answer: (B)
Equity Share Capital plus Reserves and Surplus
387. Operating leverage helps in analysis of:
- Business Risk
- Financing Risk
- Production Risk
- Credit Risk
Correct answer: (A)
Business Risk
388. Combined leverage can be used to measure the relationship between:
- EBIT and EPS
- PAT and EPS
- Sales and EPS
- Sales and EBIT
Correct answer: (C)
Sales and EPS
389. Use of Preference Share Capital in Capital structure
- Increases OL
- Increases FL
- Decreases OL
- Decreases FL
Correct answer: (B)
Increases FL
390. If a company issues new share capital to redeem debentures, then:
- OL will increase
- FL will increase
- OL will decrease
- FL will decrease
Correct answer: (D)
FL will decrease