Financial Management - Study Mode

[#621] Rate of return which is required to satisfy stockholders and debt holders is classified as
Correct Answer

(B) weighted average cost of capital

Explanation

Solution: Rate of return which is required to satisfy stockholders and debt holders is classified as weighted average cost of capital. Weighted average cost of capital ( WACC) is the average after-tax cost of a company's various capital sources used to finance the company.

[#622] Net investment in operating capital is Rs 7000 and net operating profit after taxes is Rs 11,000 then free cash flow will be
Correct Answer

(D) Rs 4,000.00

Explanation

Solution: Free cash flow = Net operating profit after taxes - Net investment in operating capital = 11000 - 7000 = Rs. 4000.

[#623] Free cash flow is Rs 17000 and net investment in operating capital is Rs 10000 then net operating profit after taxes would be
Correct Answer

(B) Rs 27,000.00

Explanation

Solution: Net operating profit after tax = Free cash flow + Net investment in operating capital = 17000 + 10000 = Rs. 27000.

[#624] An investment outlay cash flow is Rs 2000, an operating cash flow is Rs 1500 and salvage cash flow is Rs 3000 then free cash flow would be
Correct Answer

(D) Rs 6,500.00

Explanation

Solution: Free cash flow = Investment outlay cashflow + operating cash flow + salvage cash flow = 2000 + 1500 + 3000 = Rs. 6500.

[#625] An attitude of investor towards dealing with risk determines the
Correct Answer

(A) rate of return

Explanation

Solution: An attitude of investor towards dealing with risk determines the rate of return. A rate of return (RoR) is the net gain or loss on an investment over a specified time period, expressed as a percentage of the investment's initial cost. Gains on investments are defined as income received plus any capital gains realized on the sale of the investment.