MGT201 Quiz 2 Solution and Discussion
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Quiz #02
Opening Date: Nov 27, 2019 12:00 AM
Closing Date: Nov 29, 2019 11:59 PM
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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
bolded textAt the termination of project, which of the following needs to be considered relating to project assets?
Salvage valueBook 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
Which of the followings is (are) type (s) of problems associated with Capital Rationing? MGT201
Size Difference of cash flows
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
If Net Present Value technique is used, what is the ranking criterion for projects? MGT201 Choose the highest NPV
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
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
A bond has 4.3% interest yield and 16.9% Yield to Maturity. What would Capital Gains of the bond? MGT201 12.6%
Capital budgeting techniques help management in _______. MGT201 Assessing financial viability of projects
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
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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
bolded textAt the termination of project, which of the following needs to be considered relating to project assets?
Salvage valueBook 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
Which of the followings is (are) type (s) of problems associated with Capital Rationing? MGT201
Size Difference of cash flows
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 decreaseIf Net Present Value technique is used, what is the ranking criterion for projects? MGT201 Choose the highest NPV
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 yearsThe 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
A bond has 4.3% interest yield and 16.9% Yield to Maturity. What would Capital Gains of the bond? MGT201 12.6%
Capital budgeting techniques help management in _______. MGT201 Assessing financial viability of projects
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
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Which of the following has (have)voting right in management decision?
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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
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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 __________
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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
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Which of the followings is (are) type (s) of problems associated with Capital Rationing? MGT201
Size Difference of cash flows
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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?
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Which of the capital budgeting techniques extends one or both projects up to an equal point of time? MGT201 Common Life Approach
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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
Not Confirmed
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The value of a bond is directly derived from which of the followings?
All of the given MGT201 options
