Financial Management - Study Mode

[#1126] Which, among the following, are common misconceptions about cost of capital?
Correct Answer

(D) All of the above

Explanation

Solution: Depreciation-generated funds have no cost, Cost of capital is low if a project is heavily debt-financed and Cost of equity is equal to the dividend rate are common misconceptions about cost of capital.

[#1127] The Accounting period cycle of NSE is___________.
Correct Answer

(A) Wednesday to next Tuesday

Explanation

Solution: The Accounting period cycle of NSE is Wednesday to next Tuesday.

[#1128] Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be
Correct Answer

(B) zero

Explanation

Solution: Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be zero.

[#1129] Present value of future cash flows is Rs 2000 and an initial cost is Rs 1100 then profitability index will be
Correct Answer

(B) 1.82

Explanation

Solution: Profitability index = Present value of future cash flow / Initial cost = 2000 / 1100 = 1.82%.

[#1130] Profitability index in capital budgeting is used for
Correct Answer

(C) evaluate projects

Explanation

Solution: Profitability index in capital budgeting is used for evaluating projects. The profitability index is an appraisal technique applied to potential capital outlays and is a useful tool for ranking projects because it allows you to quantify the amount of value created per unit of investment.