Financial Management - Study Mode

[#966] Life that maximizes net present value of an asset is classified as
Correct Answer

(C) economic life

Explanation

Solution: Life that maximizes net present value of an asset is classified as economic life. Economic life is the period over which an entity expects to be able to use an asset, assuming a normal level of usage and preventive maintenance.

[#967] If two independent projects having hurdle rate then both projects should
Correct Answer

(A) be accepted

Explanation

Solution: If two independent projects having hurdle rate then both projects should be accepted.

[#968] Cash outflows are costs of project and are represented by
Correct Answer

(A) negative numbers

Explanation

Solution: Cash outflows are costs of project and are represented by negative numbers. Cash outflow is the amount of cash that a business disburses.

[#969] In capital budgeting, two projects who have cost of capital as 12% is classified as
Correct Answer

(A) hurdle rate

Explanation

Solution: In capital budgeting, two projects who have cost of capital as 12% is classified as hurdle rate. A hurdle rate is the minimum rate of return on a project or investment required by a manager or investor.

[#970] A line which shows relationship between an expected return and risk on efficient portfolio is considered as
Correct Answer

(C) capital market line

Explanation

Solution: A line which shows relationship between an expected return and risk on efficient portfolio is considered as capital market line. Capital market line (CML) is a graph that reflects the expected return of a portfolio consisting of all possible proportions between the market portfolio and a risk-free asset.