Financial Management - Study Mode

[#296] Process in which managers of company identify projects to add value is classified as
Correct Answer

(A) capital budgeting

Explanation

Solution: Process in which managers of company identify projects to add value is classified as capital budgeting. Capital budgeting is the process a business undertakes to evaluate potential major projects or investments.

[#297] A discount rate which equals to present value of TV to project cost present value is classified as
Correct Answer

(B) modified internal rate of return

Explanation

Solution: A discount rate which equals to present value of TV to project cost present value is classified as modified internal rate of return. The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.

[#298] An uncovered cost at start of year is Rs 300, full cash flow during recovery year is Rs 650 and prior years to full recovery is 4 then payback would be
Correct Answer

(D) 4.46 years

Explanation

Solution: Upto 4 years full cost recovered, only left portion is Rs 300 Cash flow during current year = Rs 650 So 300 recovered with in period of 300/650 = 0.4615 Than payback would be = 4 + 0.4615 = 4.46 years

[#299] Cost of Capital for Government securities is also known as:
Correct Answer

(A) Risk-free Rate of Interest

[#300] Cost of Equity Share Capital is more than cost of debt because:
Correct Answer

(B) Equity shares have higher risk than debt