MGT201 Quiz 2 Solution and Discussion

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 __________

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


Which of the followings is (are) type (s) of problems associated with Capital Rationing? MGT201
Size Difference of cash flows

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?


Which of the capital budgeting techniques extends one or both projects up to an equal point of time? MGT201 Common Life Approach

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

The value of a bond is directly derived from which of the followings?
All of the given MGT201 options