MGT201 Quiz 1 Solution and Discussion
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With continuous compounding at 8 percent for 20 years, what is the approximate future value of a Rs. 20,000 initial investment?
Select correct option:
Rs.52,000
Rs.93,219 (Correct)
Rs.99,061
Rs.915,240 -
To increase a given future value, the discount rate should be adjusted ________.
Select correct option:
Upward
Downward (Correct)
First upward and then downward
None of the given options -
Which of the following value of the shares changes with investor’s perception about the company’s future and supply and demand situation?
Select correct option:
Par value
Market value (Correct)
Intrinsic value
Face value -
Which of the following refers to time value of money concept?
Select correct option:
A rupee in one’s hand at present is worth less than the rupee that one is going to receive tomorrow (Correct)
A rupee in one’s hand at present is worth more than the rupee that one is going to receive tomorrow
A rupee in one’s hand at present is worth same as the rupee that one is going to receive tomorrow
All of the given options -
Which of the following is NOT true regarding an ordinary annuity?
Select correct option:
It is a series of equal cash flows
Cash flows occur for a specific time period (Correct)
Payments are made at the start of each period
It is also known as deferred annuity -
Which of the following includes the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization?
Select correct option:
Financial accounting
Financial management (Correct)
Financial engineering
Financial budgeting -
Which of the following is FALSE about Perpetuity?
Select correct option:
It is a series of cash flows
Cash flows occur for a specific time period
Its cash flows are identical (Correct) -
Which of the following term may be defined as incidental cash flows that arise because of the effect of new project on the running business?
Select correct option:
Sunk cost
Opportunity cost
Externalities (Correct)
Contingencies -
What is the present value of Rs. 3,500,000 to be paid at the end of 50 years if the correct risk adjusted interest rate is 18%?
Select correct option:
Rs.105,000
Rs.1,500,000
Rs.3975,000
Rs. 350,000 -
Which if the following refers to capital budgeting?
Select correct option:
Investment in long-term liabilities (Correct)
Investment in fixed assets
Investment in current assets
Investment in short-term liabilities -
An annuity due is always worth ___ a comparable annuity.
Select correct option:
Less than
More than (Correct)
Equal to
Can not be found from the given information -
The statement of cash flows reports a firm’s cash flows segregated into which of the following categorical order?
Select correct option:
Operating, investing, and financing
Investing, operating, and financing (Correct)
Financing, operating and investing
Financing, investing, and operating -
When a bond will sell at a discount?
Select correct option:
The coupon rate is greater than the current yield and the current yield is greater than yield to maturity
The coupon rate is greater than yield to maturity
The coupon rate is less than the current yield and the current yield is greater than the yield to maturity
The coupon rate is less than the current yield and the current yield is less than yield to maturity (Correct) -
If Net Present Value technique is used, what is the minimum acceptance criterion for a project?
Select correct option:
NPV
NPV=0
NPV>0
NPV -
Which if the following refers to capital budgeting?
Select correct option:
Investment in long-term liabilities
Investment in fixed assets (Correct)
Investment in current assets
Investment in short-term liabilities -
Which of the following is FALSE about Perpetuity?
Select correct option:
It is a series of cash flows
Cash flows occur for a specific time period
Its cash flows are identical (Correct)
None of the given options