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 __________
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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

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Not Confirmed

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