Financial Management - Study Mode

[#136] Projects which are mutually exclusive but different on scale of production or time of completion then the
Correct Answer

(B) net present value of method

Explanation

Solution: Projects which are mutually exclusive but different on scale of production or time of completion then the net present value of method. Net Present Value (NPV) is defined as the present value of the future net cash flows from an investment project.

[#137] Graph which is plotted for projected net present value and capital rates is called
Correct Answer

(D) net present value profile

Explanation

Solution: Graph which is plotted for projected net present value and capital rates is called net present value profile. The net present value mainly measures the net increase in the company's equity by working on a project. It is essentially the difference between the present value of cash flows and the initial investment based on the discount rate.

[#138] A modified internal rate of return is considered as present value of costs and is equal to
Correct Answer

(C) PV of terminal value

Explanation

Solution: A modified internal rate of return is considered as present value of costs and is equal to PV of terminal value. The present value (PV) of the terminal value is then added to the PV of the free cash flows in the projection period to arrive at an implied firm value.

[#139] Set of projects or set of investments usually maximize firm value is classified as
Correct Answer

(A) optimal capital budget

Explanation

Solution: Set of projects or set of investments usually maximize firm value is classified as optimal capital budget. An optimal capital structure is the objectively best mix of debt, preferred stock, and common stock that maximizes a company's market value while minimizing its cost of capital.

[#140] One of the statements given below provides evidence for the semi-strongly efficient form.
Correct Answer

(C) Effect on the stock split

Explanation

Solution: One of the statements given below provides evidence for the semi-strongly efficient form effect on the stock split.