MGT201 Solved MCQ2 from Quiz

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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:






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:






Remain unchanged


Incomplete information



Question # 4 of 10 ( Start time: 04:07:25 PM ) Total M - 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 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 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 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