MGT201 Quiz 2 Solution and Discussion


  • Cyberian's Gold

    Quiz #02
    Opening Date: Nov 27, 2019 12:00 AM
    Closing Date: Nov 29, 2019 11:59 PM


  • Cyberian's Gold

    Why companies invest in projects with negative NPV? MGT201 Because there is hidden value in each project

    Because there is hidden value in each project

    53f62f37-283e-44ae-84d7-f7f266ad8dad-image.png bolded text

    At the termination of project, which of the following needs to be considered relating to project assets?
    Salvage value

    Book value

    Intrinsic value

    Fair value

    When a bond is sold at discount? MGT201
    The coupon rate is greater than the current yield and the current yield is greater than yield to maturity
    7c3eda6e-0ff2-4ac0-93c7-db9da49f0ee6-image.png

    Which of the followings is (are) type (s) of problems associated with Capital Rationing? MGT201
    Size Difference of cash flows
    8faabff6-3dcd-4f1f-b5b0-d7e6dcf56f05-image.png

    If dividends of preferred shareholders remain constant and required return decreases then what will be impact on present value of preferred shares? MGT201
    Present Value of preferred share will decrease

    b6eb1fb7-1d54-4e57-922c-9a3d213de4e1-image.png

    If Net Present Value technique is used, what is the ranking criterion for projects? MGT201 Choose the highest NPV
    ![0_1575038179748_3924def0-50fd-465a-8691-1fc74da74e96-image.png](Uploading 100%)

    Which one of the followings is type of problem associated with Capital Rationing? MGT201 Indifferent size of cash flows

    Company A is analyzing some projects based on payback period amongst which one project will be selected. In your opinion which project is best for the company? MGT201
    Project S with pay back period of 4.5 years

    862fa83b-abd5-420c-ae59-d8cf4b7a12d6-image.png

    The value of the bond is NOT directly tied to the value of which of the following assets? MGT201 Real assets of the business

    Real assets of the business
    Liquid assets of the business
    Fixed assets of the business
    Lon term assets of the business
    c69aacf7-962c-4e03-b813-9f7475e9286a-image.png

    A bond has 4.3% interest yield and 16.9% Yield to Maturity. What would Capital Gains of the bond? MGT201 12.6%

    9c692932-70d0-4c1a-90f1-7d05a40afe6e-image.png

    Capital budgeting techniques help management in _______. MGT201 Assessing financial viability of projects

    30b23145-8105-4eab-8008-73dfd80a8a60-image.png

    What is difference between shares and bonds? MGT201
    Bonds are representing ownership whereas shares are not
    Shares are representing ownership whereas bonds are not
    Shares and bonds both represent equity
    Shares and bond both represent liabilities

    23fc7b12-6174-4eb3-9388-42254bb33158-image.png


  • Cyberian's Gold

    Why companies invest in projects with negative NPV? MGT201 Because there is hidden value in each project

    Because there is hidden value in each project

    53f62f37-283e-44ae-84d7-f7f266ad8dad-image.png bolded text

    At the termination of project, which of the following needs to be considered relating to project assets?
    Salvage value

    Book value

    Intrinsic value

    Fair value

    When a bond is sold at discount? MGT201
    The coupon rate is greater than the current yield and the current yield is greater than yield to maturity
    7c3eda6e-0ff2-4ac0-93c7-db9da49f0ee6-image.png

    Which of the followings is (are) type (s) of problems associated with Capital Rationing? MGT201
    Size Difference of cash flows
    8faabff6-3dcd-4f1f-b5b0-d7e6dcf56f05-image.png

    If dividends of preferred shareholders remain constant and required return decreases then what will be impact on present value of preferred shares? MGT201
    Present Value of preferred share will decrease

    b6eb1fb7-1d54-4e57-922c-9a3d213de4e1-image.png

    If Net Present Value technique is used, what is the ranking criterion for projects? MGT201 Choose the highest NPV
    ![0_1575038179748_3924def0-50fd-465a-8691-1fc74da74e96-image.png](Uploading 100%)

    Which one of the followings is type of problem associated with Capital Rationing? MGT201 Indifferent size of cash flows

    Company A is analyzing some projects based on payback period amongst which one project will be selected. In your opinion which project is best for the company? MGT201
    Project S with pay back period of 4.5 years

    862fa83b-abd5-420c-ae59-d8cf4b7a12d6-image.png

    The value of the bond is NOT directly tied to the value of which of the following assets? MGT201 Real assets of the business

    Real assets of the business
    Liquid assets of the business
    Fixed assets of the business
    Lon term assets of the business
    c69aacf7-962c-4e03-b813-9f7475e9286a-image.png

    A bond has 4.3% interest yield and 16.9% Yield to Maturity. What would Capital Gains of the bond? MGT201 12.6%

    9c692932-70d0-4c1a-90f1-7d05a40afe6e-image.png

    Capital budgeting techniques help management in _______. MGT201 Assessing financial viability of projects

    30b23145-8105-4eab-8008-73dfd80a8a60-image.png

    What is difference between shares and bonds? MGT201
    Bonds are representing ownership whereas shares are not
    Shares are representing ownership whereas bonds are not
    Shares and bonds both represent equity
    Shares and bond both represent liabilities

    23fc7b12-6174-4eb3-9388-42254bb33158-image.png


  • Cyberian's Gold

    Which of the following has (have)voting right in management decision?

    8a78f077-493f-4fb2-a5c3-b4415922ecca-image.png


  • Cyberian's Gold

    Which of the following techniques would be used for a project that has non–normal cash flows?

    Internal rate of return
    Multiple internal rate of return
    Modified internal rate of return
    Net present value

    ![0_1575037249310_d5e6cd15-df4e-42ff-9ce6-ac252ee8e792-image.png](Uploading 100%)


  • Cyberian's Gold

    Cash flow 1 = Negative Rs. 100,000
    Cash flow 2 = Positive Rs. 600,00
    Cash flow 3 = Negative Rs. 250,000
    In this situation, the capital budgeting technique suitable for the project is __________
    6c3040b4-d49b-4ac7-9011-f5fa4eb33707-image.png


  • Cyberian's Gold

    Which of the following is likely to be correct for a company which invests in projects with Positive NPV? MGT201

    Company’s EVA (Economic Value Added) rises by the same value
    All of the given options

    4de3e83f-e11b-4a30-97fb-b3fc271efa4b-image.png


  • Cyberian's Gold

    Which of the followings is (are) type (s) of problems associated with Capital Rationing? MGT201
    Size Difference of cash flows
    b172a31d-cee0-4068-8891-c92c6eca2315-image.png


  • Cyberian's Gold

    The initial cash outflow of the project C is Rs. 800,000 and the sum of project’s future cash inflows is Rs. 600,000. What is the Profitability Index of the project C?

    3006c99a-97e0-4f17-a499-f00ad4326b99-image.png


  • Cyberian's Gold

    Which of the capital budgeting techniques extends one or both projects up to an equal point of time? MGT201 Common Life Approach
    5e455804-fbed-45cf-81fb-7f875e501078-image.png


  • Cyberian's Gold

    From the following information, calculate the amount of Net Cash Flow.
    Net Operating Income= Rs. 120,000
    Depreciation= Rs. 20,000
    Additional Investments in Fixed Assets= Rs. 25,000
    Cash from Sale of Assets at Salvage Value= Rs.5,000

    9955d774-60fa-4bd8-9225-193dfd65bea7-image.png
    Not Confirmed


  • Cyberian's Gold

    The value of a bond is directly derived from which of the followings?
    9586f59f-16f2-43ad-9224-7b38c248c13c-image.png
    All of the given MGT201 options



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