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Budgeting and Cash Flow Estimation Online Exam Quiz

Important questions about Budgeting and Cash Flow Estimation. Budgeting and Cash Flow Estimation MCQ questions with answers. Budgeting and Cash Flow Estimation exam questions and answers for students and interviews.

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


A : a. positive

B : b. independent

C : c. negative

D : d. zero

In the mutually exclusive projects, the project which is selected for comparison with others must have


A : a. higher net present value

B : b. lower net present value

C : c. zero net present value

D : d. all of the above

The relationship between Economic Value Added (EVA) and the Net Present Value (NPV) is considered as


A : a. valued relationship

B : b. economic relationship

C : c. direct relationship

D : d. inverse relationship

In capital budgeting, the positive net present value results in


A : a. negative economic value added

B : b. positive economic value added

C : c. zero economic value added

D : d. percent economic value added

An uncovered cost at the start of year is divided by full cash flow during recovery year then added in prior years to full recovery for calculating


A : a. original period

B : b. investment period

C : c. payback period

D : d. forecasted period

In cash flow analysis, the two projects are compared by using common life, is classified as


A : a. transaction approach

B : b. replacement chain approach

C : c. common life approach

D : d. both b and c

Other factors held constant, but the lesser project liquidity is because of


A : a. shorter payback period

B : b. greater payback period

C : c. less project return

D : d. greater project return

In capital budgeting, an internal rate of return of the project is classified as its


A : a. external rate of return

B : b. internal rate of return

C : c. positive rate of return

D : d. negative rate of return

In independent projects evaluation, the results of internal rate of return and net present value lead to


A : a. cash flow decision

B : b. cost decision

C : c. same decisions

D : d. different decisions

In internal rate of returns, the discount rate which forces the net present values to become zero is classified as


A : a. positive rate of return

B : b. negative rate of return

C : c. external rate of return

D : d. internal rate of return

* The projects which are mutually exclusive but different on scale of production or time of completion than the


A : a. external return method

B : b. net present value of method

C : c. net future value method

D : d. internal return method

The graph which is plotted for projected net present value and capital rates is called


A : a. net loss profile

B : b. net gain profile

C : c. net future value profile

D : d. net present value profile

The set of projects or set of investments to maximize the firm value is classified as


A : a. optimal capital budget

B : b. minimum capital budget

C : c. maximum capital budget

D : d. greater capital budget

A point where the profile of net present value crosses the horizontal axis at the plotted graph indicates the project


A : a. costs

B : b. cash flows

C : c. internal rate of return

D : d. external rate of return

The modified rate of return and modified internal rate of return with exceed cost of capital if the net present value is


A : a. positive

B : b. negative

C : c. zero

D : d. one

The payback period in which an expected cash flows are discounted with the help of project cost of capital is classified as


A : a. discounted payback period

B : b. discounted rate of return

C : c. discounted cash flows

D : d. discounted project cost

In alternative investments, the constant cash flow stream is equal to initial cash flow stream in the approach which is classified as


A : a. greater annual annuity method

B : b. equivalent annual annuity

C : c. lesser annual annuity method

D : d. zero annual annuity method

The number of years forecasted to recover an original investment is classified as


A : a. payback period

B : b. forecasted period

C : c. original period

D : d. investment period

In capital budgeting, the term of bond which has great sensitivity to interest rates is


A : a. long-term bonds

B : b. short-term bonds

C : c. internal term bonds

D : d. external term bonds

The process in which the managers of the company identify projects to add value is classified as


A : a. capital budgeting

B : b. cost budgeting

C : c. book value budgeting

D : d. equity budgeting

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