Financial Management - Study Mode

[#356] The constant growth model of equity valuation assumes that _____________.
Correct Answer

(B) the dividends paid by the company grow at a constant rate of growth

Explanation

Solution: The constant growth model of equity valuation assumes that the dividends paid by the company grow at a constant rate of growth.

[#357] Free cash flow is Rs 15000 and net investment in operating capital is Rs 9000 then net operating profit after taxes will be
Correct Answer

(A) Rs 24,000.00

Explanation

Solution: Net operating profit after tax = Free cash flow + Net investment in operating capital = 15000 + 9000 = Rs. 24000.

[#358] In cash flow estimation, depreciation is considered as
Correct Answer

(B) noncash charge

Explanation

Solution: In cash flow estimation, depreciation is considered as noncash charge. A company will take a non-cash charge against non-cash items on the balance sheet, such as depreciation, amortization, and depletion. These charges are typically made when something unusual happens, often outside the control of the company.

[#359] Net operating profit after taxes is Rs 4500, net investment in operating capital is Rs 8500 and then free cash flow would be
Correct Answer

(A) -Rs 4,000.00

Explanation

Solution: Free cash flow = Net operating profit after taxes - Net investment in operating capital = 4500 - 8500 = Rs. -4000.

[#360] Net investment in operating capital is subtracted from net operating profit after taxes to calculate
Correct Answer

(B) free cash flow

Explanation

Solution: Net investment in operating capital is subtracted from net operating profit after taxes to calculate free cash flow. Free cash flow represents the cash a company generates after cash outflows to support operations and maintain its capital assets.