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1 Finance MCQs

In capital budgeting, the profitability index (PI) is primarily used to evaluate what?

  • Negative projects
  • Relative projects
  • Evaluate projects
  • Earned projects
0 Comments
Correct Answer: C. Evaluate projects

Explanation:

The correct option is this Evaluate projects.


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2 Finance MCQs

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

  • Valued relationship
  • Economic relationship
  • Direct relationship
  • Inverse relationship
0 Comments
Correct Answer: C. Direct relationship

Explanation:

The correct option is this Direct relationship.


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3 Finance MCQs

To calculate a project’s profitability, the present value of future cash flows is divided by the initial cost of the project. This is known as which of the following?

  • Negative index
  • Exchange index
  • Project index
  • Profitability index
0 Comments
Correct Answer: D. Profitability index

Explanation:

The correct option is this Profitability Index.


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4 Finance MCQs

In calculating Net Present Value (NPV), the first step is to determine which of the following?

  • Present value of equity
  • Future value of equity
  • Present value of cash flow
  • Future value of cash flow
0 Comments
Correct Answer: C. Present value of cash flow

Explanation:

The correct option is this Present value of cash flow.


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5 Finance MCQs

The period of an asset’s life that maximizes its Net Present Value (NPV) is classified as which of the following?

  • Minimum life
  • Present value life
  • Economic life
  • Transaction life
0 Comments
Correct Answer: C. Economic life

Explanation:

The correct option is this Economic life.


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6 Finance MCQs

In capital budgeting, a project with a positive Net Present Value (NPV) results in which of the following?

  • Negative economic value added
  • Positive economic value added
  • Zero economic value added
  • Percent economic value added
0 Comments
Correct Answer: B. Positive economic value added

Explanation:

The correct option is this Positive economic value added.


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7 Finance MCQs

When estimating the value of cash flows, the compounded future value of those cash flows is classified as which of the following?

  • Terminal value
  • Existed value
  • Quit value
  • Relative value
0 Comments
Correct Answer: A. Terminal value

Explanation:

The correct option is this Terminal value.


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8 Finance MCQs

A cash flow pattern that starts negative, then becomes positive, and remains positive is classified as which of the following?

  • Normal costs
  • Non-normal costs
  • Non-normal cash flow
  • Normal cash flow
0 Comments
Correct Answer: C. Non-normal cash flow

Explanation:

The correct option is this Non-normal cash flow.


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9 Finance MCQs

In project analysis, cash inflows, which represent the revenues of a project, are typically shown as what type of numbers?

  • Hurdle number
  • Relative number
  • Negative numbers
  • Positive numbers
0 Comments
Correct Answer: D. Positive numbers

Explanation:

The correct option is this Positive numbers.


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10 Finance MCQs

Net Present Value (NPV), Profitability Index (PI), Payback Period, and Discounted Payback are all methods used to evaluate what?

  • Evaluate cash flow
  • Evaluate projects
  • Evaluate budgeting
  • Evaluate equity
0 Comments
Correct Answer: B. Evaluate projects

Explanation:

The correct option is this Evaluate projects.


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