Financial Management - Study Mode
[#361] Project which is started by firm for increasing sales is classified as
Correct Answer
(A) new expansion project
Explanation
Solution: Project which is started by firm for increasing sales is classified as new expansion project. These are projects where the firm seeks to profitably increase sales of current products or introduce new products into the market.
[#362] Real interest rate and real cash flows do not include
Correct Answer
(C) inflation effects
Explanation
Solution: Real interest rate and real cash flows do not include inflation effects. Inflation may or may not result in an increase in production. As long as the economy does not reach the full employment stage, inflation has a favorable effect on production. Usually, as the price level increases, profits increase too.
[#363] Gross fixed asset expenditures is Rs 6000 and free cash flow is Rs 8000 then operating cash flows will be
Correct Answer
(B) Rs 2,000.00
Explanation
Solution: Operating cash flow = Free cash flow - Fixed expenditure = 8000 - 6000 = Rs. 2000.
[#364] Real rate expected cash flows and nominal rate expected cash flows must be
Correct Answer
(B) equal
Explanation
Solution: Real rate expected cash flows and nominal rate expected cash flows must be equal. Nominal cash flow is the true dollar amount of future revenues the company expects to receive and expenses it expects to pay out, without any adjustments for inflation. In the short term and under conditions of low inflation, the amounts attributed to nominal and real cash flows are nearly identical.
[#365] Double declining balance method and sum of years digits are included in
Correct Answer
(D) accelerated methods
Explanation
Solution: Double declining balance method and sum of years digits are included in accelerated methods.