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MGT201 MCQ2 from Quiz Solved 1
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 Published on Sunday, 04 July 2010 03:32
 Written by Fuad Hasan
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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 M  1
To increase a given future value, the discount rate should be adjusted __________.
Select correct option:

Upward 

Downward 

First upward and then downward 

None of the given options 
Question # 3 of 10 ( Start time: 04:06:35 PM ) Total M  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 M  1
A 5year 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 M  1
At the termination of project, which of the following needs to be considered relating to project assets?
Select correct option:

Salvage value 

Book value 

Intrinsic value 

Fair value 
Question # 6 of 10 ( Start time: 04:09:27 PM ) Total M  1
What is the longrun 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 M  1
What is potentially the biggest advantage of a small partnership over a sole proprietorship?
Select correct option:

Unlimited liability 

Single tax filing 

Difficult ownership resale 

Raising capital 
Question # 8 of 10 ( Start time: 04:10:16 PM ) Total M  1
Which of the following effects price of the bond?
Select correct option:

Market interest rate 

Required rate of return 

Interest rate risk 

All of the given options 
uestion # 9 of 10 ( Start time: 04:10:31 PM ) Total M  1
An annuity due is always worth _____ a comparable annuity.
Select correct option:

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 M  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 