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MCQ's on Capital Budgeting Decisions (in Hindi)
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Heena Malhotra
Believe in Conceptual Learning.

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plz tell me about yr live session! when u cm live? everday or once a week??
I scored full 7/7 . :) All credit goes to you maam ;) I am a student with no finance background but after learning from your lessons, I have become an expert in Finance subject. thank you very verymuch for your efforts :)
d,b,a, a, c, a, a, mere d, a, a,a,c,a,a, apke 1 galat aya
one wrong ... question 6.. samjh nh aaya ..
  1. Capital Budgeting Decisions By Heena Malhotra


  2. 1. A capital budgeting technique which does not require the computation of cost of capital for decision making purposes is, (a) Net Present Value method (b) Internal Rate of Return method () Modified Intemal Rate of Return method d) Pay back By Heena Malhotra


  3. 2. If two alternative proposals are such that the acceptance of one shall exclude the possibility of the acceptance of another then such decision making will lead to, (a) Mutually exclusive decisions (b) Accept reject decisions (c) Contingent decisions (d) None of the above 3. In case a company considers a discounting factor higher than the cost of capital for arriving at present values, the present values of cash inflows will be (a) Less than those computed on the basis of cost of capital (b) More than those computed on the basis of cost of capital (c) Equal to those computed on the basis of the cost of capital (d) None of the above By Heena Malhotra


  4. 4. The pay back technique is specially useful during times (a) When the value of money is turbulent (b) When there is no inflation (c) When the economy is growing at a steady rate coupled with minimal inflation. (d) None of the above i 5. While evaluating capital investment proposals, time value of money is used in of he olowing teiniquee which of the following techniques, (a) Payback method (b) Accounting rate of return (c) Net present value (d) None of the above


  5. 6. IRR would favour project proposals which have Heavy cash inflows in the early stages of the project. (b) (a) Evenly distributed cash inflows throughout the project. (c) Heavy cash inflows at the later stages of the project (d) None of the above. 7. The re- investment assumption in the case of the IRR technique assumes that, (a) Cash flows can be re- invested at the projects IRR (b) Cash flows can be re- invested at the weighted cost of capital (c) Cash flows can be re- invested at the marginal cost of capital (d) None of the above By Heena Malhotra


  6. 9. Depreciation is included as a cost in which of the following techniques, (a) Accounting rate of return (b) Net present value (c) Internal rate of return (d) None of the above 10. Management is considering a 1,00,000 investment in a project with a 5 year life and no residual value . If the total income from the project is expected to be 60,000 and recognition is given to the effect of straight line depreciation on the investment, the average rate of return is (a) 12% (b) 24% (c) 60% (d) 75% By Heena Malhotra


  7. 11. Assume cash outflow equals ? 1,20,000 followed by cash inflows of 25,000 per year for 8 years and a cost of capital of 11%. What is the Net present value? (a) R 38,214) (b) 9,653 (c) 8,653 (d) 38,214 12. What is the Internal rate of return for a project having cash flows of ? 40,000 per 2,26,009? year for 10 years and a cost of (a) 8% (b) 9% (c) 10% (d) 12% By Heena Malhotra


  8. 13. While evaluating investments, the release of working capital at the end of the projects life should be considered as, (a) Cash in flow (b) Cash out flow (c) Having no effect upon the capital budgeting decision (d) None of the above. 14. Capital rationing refers to a situation where, (a) Funds are restricted and the management has to choose from amongst available alternative investments. Funds are unlimited and the management has to decide how to allocate them to suitable projects. (b) c) Very few fessible investment proposals are available with the management (d) None of the above By Heena Malhotra


  9. 15. Capital budgeting is done for (a) Evaluating short term investment decisions. (b) Evaluating medium term investment decisions (c) Evaluating long term investment decisions. (d) None of the above By Heena Malhotra