Financial Management - Study Mode

[#481] Rate of required return by debt holders is used for estimation the
Correct Answer

(A) cost of debt

Explanation

Solution: Rate of required return by debt holders is used for estimation the cost of debt. Cost of debt refers to the effective rate a company pays on its current debt. In most cases, this phrase refers to after-tax cost of debt, but it also means the company's cost of debt before taking taxes into account.

[#482] A project whose cash flows are more than capital invested for rate of return then net present value will be
Correct Answer

(A) positive

Explanation

Solution: A project whose cash flows are more than capital invested for rate of return then net present value will be positive.

[#483] In mutually exclusive projects, project which is selected for comparison with others must have
Correct Answer

(A) higher net present value

Explanation

Solution: In mutually exclusive projects, project which is selected for comparison with others must have higher net present value. A positive net present value indicates that the projected earnings generated by a project or investment - in present dollars - exceeds the anticipated costs, also in present dollars. It is assumed that an investment with a positive NPV will be profitable, and an investment with a negative NPV will result in a net loss.

[#484] Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is considered as
Correct Answer

(C) direct relationship

Explanation

Solution: Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is considered as direct relationship.

[#485] An uncovered cost at start of year is Rs 200, full cash flow during recovery year is Rs 400 and prior years to full recovery is 3 then payback would be
Correct Answer

(B) 3.5 years