MGT201 Solved Quiz 2 2011

MGT201

Why companies invest in projects with negative NPV?

Select correct option:

Because there is hidden value in each project Because there may be chance of rapid growth Because they have invested a lot

All of the given options

Question # 2 of 10 ( Start time: 04:05:43 PM ) Total Marks: 1

To increase a given future value, the discount rate should be adjusted                   .

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Upward

Downward

First upward and then downward

None of the given options

Question # 3 of 10 ( Start time: 04:06:35 PM ) Total Marks: 1

In 2 years you are to receive Rs.10,000. If the interest rate were to suddenly decrease, the present value of that future amount to you would                                      .

Select correct option:

Fall

Rise

Remain unchanged

Incomplete information

Question # 4 of 10 ( Start time: 04:07:25 PM ) Total Marks: 1

A 5-year annuity due has periodic cash flows of Rs.100 each year. If the interest rate is 8 percent, the present value of this annuity is closest to which of the following equations?

Select correct option:

(Rs.100)(PVIFA at 8% for 4 periods) + Rs.100 (Rs.100)(PVIFA at 8% for 4 periods)(1.08) (Rs.100)(PVIFA at 8% for 6 periods) - Rs.100

Can not be found from the given information

Question # 5 of 10 ( Start time: 04:08:40 PM ) Total Marks: 1

At the termination of project, which of the following needs to be considered relating to project assets?

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Salvage value Book value Intrinsic value Fair value

Question # 6 of 10 ( Start time: 04:09:27 PM ) Total Marks: 1

What is the long-run objective of financial management?

Select correct option:

Maximize earnings per share

Maximize the value of the firm's common stock

Maximize return on investment

Maximize market share

Question # 7 of 10 ( Start time: 04:09:56 PM ) Total Marks: 1

What is potentially the biggest advantage of a small partnership over a sole proprietorship?

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Unlimited liability

Single tax filing

Difficult ownership resale

Raising capital

Question # 8 of 10 ( Start time: 04:10:16 PM ) Total Marks: 1

Which of the following effects price of the bond?

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Market interest rate Required rate of return Interest rate risk

All of the given options

Question # 9 of 10 ( Start time: 04:10:31 PM ) Total Marks: 1

An annuity due is always worth          a comparable annuity.

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Less than More than Equal to

Can not be found from the given information

Question # 10 of 10 ( Start time: 04:10:53 PM ) Total Marks: 1

A capital budgeting technique through which discount rate equates the present value of the future net cash flows from an investment project with the project’s initial cash outflow is known as:

Select correct option:

Payback period Internal rate of return Net present value Profitability index