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1.Property right is responsible for
-------------
A. Market Failure
B. Perfect market
C. Private market
D. Government market
ANS: A
2.A project is profitable if NPV is
-----------
A. Zero
B. One
C. Negative
D. Positive
ANS: D
3.Present value may be defined as
-----------------
A. The discounted value
of future cash flows
B. The interest rate earned on future cash
flows
C. The compounded value of future cash flows
D. The opportunity costs of future cash
ANS: A
4.Capital budgeting is a part of ---------------
A. Investment decision
B. Working capital management
C. Marketing management
D. Capital structure
ANS: A
5.Capital budgeting decisions are
--------------
A. Reversible
B. Irreversible
C. Unimportant
D. Short term
ANS: B
6. The span of time within which the
investment made for the project will be recovered by the net returns of the
project is known as---------
A. Period return
B. Payback return
C. Span of return
D. Net present return
ANS: B
7.According
to the IRR method of capital budgeting a project will accepted if----
A. IRR less then market rate of interest
B. IRR equal to NPV
C. IRR greater than market rate of interest
D. IRR equal to market rate ofinterest
ANS: C
8. Capital budgeting deals with --------------
A. Long term decisions
B. Short term decisions
C. Regular
D. Span of return
ANS: A
9. Payback period method of capital budgeting
primarily focuses on-----------
A. The current rate of
interest
B. The rate of profitability of assets
C. Time period required to recover original
investment
D. The cost acquiring capital assets
ANS: C
10. Under payback period method --------------
project are preferred.
A. Higher payback period
B. Lower pay back period
C. Normal pay back period
D. Medium pay back period
ANS: B
11. Which one of the following methods of
capital budgeting assumes thatinflows are reinvested at the project’s rate of
return.
A. Net present value
B. Internal rate of return
C. Pay back method
C. Accounting rate of return method
ANS: B
12.Which of the following is not a capital
budgeting decision?
A. Expansion programmed
B. Merger
C. Inventory level
D Replacement of an asset
ANS: C
13.The values of the future net incomes discounted by the cost of capital are called --------
A. Average capital cost
B. Discounted capital cost
C. Net capital cost
D. Net present values
ANS: D
14.Investment to replace working but obsolete
equipment with more efficient ones is generally done for ………….
A. Increasing cost
B. Cost reduction
C. Expansion into new markets
D. Expansion of existing production capacity
ANS: B
15. Apple limited invest the money in project A
is Rs.B0000 and cash inflow every year is Rs.5000. What is the Payback period
of project A?
A. 5 years
B. 4 years
C. 6 years
D. B years
ANS: B
16. KR private limited company invest the money
in project 2 is Rs.100000 and
Cash inflow every year is Rs 40000. What is the Payback period of project 2?
A. 2 years 3 month
B. 4 years
C. 2 years 6 month
D. 2 years 5 months
ANS: D
17.
The first step in calculation of NPV is to find out--------------
A. Present value of
equity
B. Future value of investment
C. Present value of cash flow
D. Future value of cash flow
ANS: C
18.
-----------------is one method of capital budgeting.
A. End use method
B. Expert opinion method
C. IRR method
D. Survey method
ANS: C
19. SCB private limited company invest the
money in project C is Rs.B00000 and Cash inflow every year is Rs B5000. What is
the Payback period of project B?
A. 8 years 3 month
B. 8 years
C. 8 years 6 month
D. 6 years 5 months
ANS: B
20. If
the present value of total cash outflow is Rs.B0000 and present value of total Cash
inflow is Rs.A9000, What is the
NPV of the project?
A. 1000
B. -1000
C. 2000
D. -2000
ANS: B
21. If
the present value of total cash outflow is Rs.C0000 and present value of total
Cash inflow is Rs.C5000, What is the NPV of the project?
A. 5000
B. -5000
C. 2000
D. -2000
ANS: A
22. --------------- is one of the causes
responsible for market failure.
A. Price taker
B. Kinked curve
C. Imperfect information
D. Price rigidity
ANS: C
23. A iPod is ----------------------good
A. Public
B. Private
C. Normal
D. Common
ANS : B
24. Which of the following apply to
externalities?
A. They are always negative
B. They
are always responsible for welfare loss
C. They
are private cost of economic behavior
D. They
are not normally reflected in the market price of a product
ANS: D
25. How does the government intervene in the
supply and demand of demerit goods?
A. By banning goods
B. Making public services announcement
C. Impose more tax on the goods
D. By requiring warning labels
ANS: C
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In question no 15 & 17, why are you write B, even there should have a no?
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