Business Finance - Practice Test

[#151] In case cost of capital is 10%, EPS is Rs. 10, IRR is 8%, and Retention Ratio is 60%, then the value of equity share as per Gordon's Model will be

(A) Rs. 100

(B) Rs. 87

(C) Rs. 90

(D) Rs. 77

Correct Answer

(D) Rs. 77

[#152] Trading on equity refers to the following situation

(A) Optimum capital structure

(B) Appropriate capitalization

(C) Capital gearing

(D) Watered capital

Correct Answer

(C) Capital gearing

[#153] In capital budgeting, the term capital rationing implies

(A) No retained earnings are available

(B) Limited funds are available for investment

(C) No external funds can be raised

(D) No fresh investment is required in the current year

Correct Answer

(B) Limited funds are available for investment

[#154] Which of the following is not an application of working capital?

(A) Day-to-day expenditure of business

(B) Current obligations for payment

(C) Expenditure in the usual course of business

(D) Expenditure to acquire capital

Correct Answer

(D) Expenditure to acquire capital

[#155] Positive NPV in project appraised by a firm may not occur an account of

(A) Economics of scale

(B) Market reach

(C) Product differentiation

(D) Intangible benefits

(E) Economics of scale

(F) Market research

(G) Product differentiation

(H) Intangible benefits

Correct Answer

(D) Intangible benefits
(H) Intangible benefits

Business Finance - Study Mode

[#151] In case cost of capital is 10%, EPS is Rs. 10, IRR is 8%, and Retention Ratio is 60%, then the value of equity share as per Gordon's Model will be

Correct Answer

[#152] Trading on equity refers to the following situation

Correct Answer

[#153] In capital budgeting, the term capital rationing implies

Correct Answer

[#154] Which of the following is not an application of working capital?

Correct Answer

[#155] Positive NPV in project appraised by a firm may not occur an account of

Correct Answer