In case of mutually exclusive; when “Project M” should be accepted?

• A) IRR M - IRR N = 0
• B) IRR M > IRR N
• C) IRR M = IRR N
• D) IRR M < IRR N

Investment required for the project= Rs.300,000
Cash flows= Rs.80,000, Rs. 160,000 and Rs.180,000
Payback period= ?

• A) 2.51 year
• B) 3.01 year
• C) 2.33 year
• D) 2.01 year

For stock of ABC company:
Standard deviation=8%
Expected return=16%
Cost of capital=10%
Coefficient of variation= ?

• A) 0.50
• B) 0.63
• C) 2.00
• D) 1.25

Which of the following is (are) advantage(s) of Gantt chart?

• A) It does not give a clear indication of interrelationship between the separate activities.
• B) All of the given options
• C) It does not clearly indicate details regarding the progress of activities.
• D) It provides an easy graphical presentation of when activities might take place.

An investment opportunity is offering you a rate of 15.5%. There is an inflation of 5.5%. What is the real rate which you can earn?

• A) 10.5%
• B) 5.5%
• C) 10.0 %
• D) 15.5%

Which of the following is correct for Cost plus pricing?

• A) It is short run pricing concept.
• B) None of the given options
• C) It is useful for any time duration.
• D) It is long run pricing concept.

Contribution margin per unit is Rs. 60; sold units are 1,000 and fixed cost is Rs. 50,000.
Required: Identify the total contribution margin with the help of provided data.

• A) Rs. 10,000
• B) Rs. 1,000
• C) Rs. 60
• D) Rs. 60,000

Multiple Internal Rate of Return (IRR) is calculated when:

• A) Cash flows of the project are conventional.
• B) Cash flows of the project are unconventional.
• C) Initial cash outflow is very high.
• D) Initial cash outflow is nominal.

Identify the Return on Capital employed with the help of following information:
Total net profit after tax: Rs. 1,284,087; average annual net profit after tax: Rs. 321,022; average investment: Rs. 1,450,000.

• A) 89%
• B) Required more data to find value
• C) 22%
• D) 25%

IRR takes into account………………………….., which is good basis for decision making.

• A) All of the given options
• B) Investment recovery period
• C) Time value of money
• D) Adjustment for uneven cash flows

You have decided to use present value method to a proposed project. What is the condition for rejection of the project?

• A) NPV is at break-even
• B) NPV is Negative
• C) NPV is Positive
• D) Need more analysis

Identify the discounted payback period of “Project A” of a Company with the help of following data:
Cash outflow for the project: Rs. 2,800,000; discounted cash flows for year 1, year 2, year 3, year 4 are Rs. 1,835,600 ; Rs. 1,106,500; Rs. 473,200 and Rs. 323,900 respectively.

• A) 4.13 year
• B) 1.13 year
• C) 2.13 year
• D) 3.13 year

Division Y of automobile spare parts; manufactures motors and budgets to transfer 72 motors to Division Z and to sell 48 motors to external customers. The standard cost information per motor for Division Y is as follows:
Variable cost per motor: Rs. 100 per motor; fixed production overhead and fixed selling & administrative overhead per motor: Rs. 150. In order to set the external selling price the company uses a 44 % mark up on total standard cost.
Required: Identify the sales if the transfer price is set at the total production cost.

• A) Rs. 17,280
• B) Rs. 35,280
• C) Rs. 18,000
• D) Rs. 720

Return on Investment (ROI) can be improved by:

• A) increase in expenses.
• B) increasing the investment.
• C) increasing the sales.
• D) decreasing sales.

Identify the profitability of index of” Project A” if Present value of inflows and Present value of outflows are Rs. 176,213 and 213,225 respectively.

• A) 1.00
• B) 0.83
• C) None of the given options
• D) 1.21

Identify the Coefficient of variation if “stock of company C” has 8 % standard deviation, 16% expected return and cost of capital of the project of “Company C” is 9%?

• A) 0.50
• B) 2.00
• C) 1.78
• D) 0.89

Which of the following “Capital budgeting technique” ignores the concept of time value of money?

• A) Net present value
• B) Payback period
• C) Profitability index
• D) Internal rate of return

Sale price per unit=Rs. 1800
Variable cost= Rs.1300
Fixed cost= Rs.310,000
Break-even point (units)= ?

• A) 238 units
• B) 620 units
• C) 580 units
• D) 600 units

Project should be accepted for investment if:

• A) weighted average cost of capital >cost of debt
• B) weighted average cost of capital < internal rate of return
• C) weighted average cost of capital = internal rate of return
• D) weighted average cost of capital > internal rate of return

Which of the following is not a method of “capital budgeting”?

• A) Profitability index
• B) Equivalent annual annuity
• C) Internal rate of return
• D) Incremental pension plan