Home » Capital Budgeting Objective Questions » 300+ TOP Capital Budgeting MCQs and Answers. If $6,000 is withdrawn each year, ho... A: The $50000 fund is a lump sum amount today. 20. 19. (2) What is the book rate of return based on the average book value, rounded to 2 decimal places?e. Posted in Capital Budgeting Objective Questions. Click it to see your results. 4 2,83,000 5 2,73,000 6 80,000 (Scrap value) (b) Considering the data given in the above. Since your question has multiple sub-parts, we will solve first three sub-parts for you. back 16. A: Efficient Market Hypothesis is a hypothesis that states that the asset prices reflect all available ... Q: What types of fees and conditions are prohibited under RESPA? The cash expenditures will be $1,500 per year. Payback And Discounted Payback Provide An Indication Of Both The Risk And The Liquidity Of A Project. ), Risk preference, investment return, cash flow, Risk aversion, investment profitability, time value, Cash flow, financial implications, investment criteria, Credit availability, cash return, investment criteria. Required fields are marked * Comment . Year end Cash inflows $ 1 2,30,000 2 2,28,000 3 2,78,000. Join the Answers. Reply. Present value of future cash flows over the cost of the investment, Cost of the investment over expected profit. Essay Disclaimer: The services you provide are meant to assist the buyer by providing a guideline and the materials provided is intended to be used for research or study purposes only. The values of the future net incomes discounted by the cost of capital are called, 5. What is the payback period (in years,rounded to 2 decimal places) for this investment assuming that the cash inflows occur evenlythroughout the year?c. (Please note that Time 0 is the start of year 1 and Time n is the end of Year n - for example Time 5 is the end of year 5. In our last article, we talked about the Basics of Capital Budgeting, which covered the meaning, features and Capital Budgeting Decisions. (30%), You are required to comment on the stability of the projects. Its dividend growth rate is expected to be constant at 18... A: Current Stock Price = Present value of the future dividends for first 2 years +Present Value of the ... Q: If all ratios are expected to remain constant, an equation can beused to forecast AFN. She should purchase the building, because a profitability index of two means that the investment is very profitable. If you're making an investment, why is it important to understand the present value of future cash flows? Additional funds needed (AFN) is the amount of money a company must raise from extern... Q: A person invests $50,000 in an investment that earns 6 percent. 4. Following market and financial research conducted by the company, the expected cash flows of two marketing projects (A and B) for the next ten years are provided in the table below. Selection of one investment precludes the selection of an alternative. Get best assignment questions and answers help 24/7 and Earn better grades with homework. The financial tracking process of figuring out where and how a corporation spends its money. Search Here for Skill. Projects with __________ are preferred. b. (50%), Discuss the detailed advantages (strengths) and disadvantages (weaknesses) of each method of investment appraisal techniques. If the discount rate is 5%, what is the project's net present value? When you make an investment, you want to know how much money you expect to make from the investment. Your email address will not be published. Copyright 2020 , Engineering Interview Questions.com, Capital Budgeting Multiple Choice Questions. When you have completed the practice exam, a green submit button will A: Real Estate Settlement Procedures Act (RESPA)? Where capital availability is unlimited and the projects are not mutually exclusive, for the same cost of capital, following criterion is used, (A) Net present value is greater than zero, (B) Internal Rate of Return will be greater than cost of capital, (C) Profitability index will be greater than unity, 11. The cash flows are as follows: Year Project A Project B 1 $6,000 $5,000 2 4,000 3,000 3 3,000 8,000 . Most Asked Technical Basic CIVIL | Mechanical | CSE | EEE | ECE | IT | Chemical | Medical MBBS Jobs Online Quiz Tests for Freshers Experienced. Choose your answers to the questions and click 'Next' to see the next set of questions. Jane learns that her landlord is selling the building and giving her the first opportunity to purchase it. 18. Biological and Biomedical She should purchase the building, because a profitability index of two means that the investment is modestly profitable. 20. Get Assessment answers online from experts in Australia-UK & USA. Based on this number, should Jane purchase the building? 3. 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Reply. Capital Budgeting Techniques Questions And Answers Answer to Capital Budgeting Techniques Adrian Sonnetson, the owner of Adrian Motors, is considering addition of a paint and body. Based on the payback method, which of the two projects should be chosen? Which of the following is not a capital budgeting decision? (10%). The financial analysis process that a corporation conducts to determine if they should pursue a potential investment or project. Question: In Making The Accept/reject Decision, Each Of The Capital Budgeting Decision Methods Provides Decision Makers With A Somewhat Different Piece Of Relevant Information. With limited finance and a number of project proposals at hand, select that package of projects which has, (B) Internal rate of return is greater than cost of capital, (C) Profitability index is greater than unity, 12. Good luck! Contact us by phone at (877) 266-4919, or by mail at 100 View Street #202, Mountain View, CA 94041.