991. Accounting rate of return is the ratio of average value of
A. profit after tax to salvage value of the investment.
B. profit before tax to present value of the investment.
C. profit after tax to book value of the investment.
D. profit after tax to present value of the investment.
992. Which of the following statement(s) regarding IRR is true?
A. If IRR is less than the firm’s cost of capital, the project should be rejected.
B. A project can have multiple IRRs depending on the cash flow streams.
C. A project can have only one IRR.
D. Both (A) and (B)
993. The cost of capital declines when the degree of financial leverage increases ‘who advocated it’.
A. Net operating income approach
B. Net income approach
C. Modigliani – Miller approach
D. Traditional Approach
994. The formula , ((1 – ti) EPS / MP ) X 100 , may be used for
A. cost of equity capital
B. cost of retained earnings
C. cost of preference share capital
D. cost of debt capital
995. Cost of depreciation fund computed as
A. Long term loan capital
C. Short term loan capital
996. Discounted cash flow criteria for investment appraisal does not include
A. Not present value
B. Benefit cost ratio
C. Accounting rate of return
D. Internal rate of return
997. In case the finn is all equity financed, WACC would be equal to
A. Cost of Debt
B. Cost of Equity
D. Both (A) and (B)
998. Which is the importance of the concept of cost of capital?
A. Helpful in comparative analysis of various sources of finance
B. Helpful in Capital structure decisions
C. Helpful in Capital budgeting process
D. All of the above
999. Which one of the following is not a sources of conflict in project ranking in capital budgeting decision as per NPV and IRR.
A. Independent Investment project
B. No capital Budget constraints
C. No time disparity
D.None of the above.
1000. Modigliani and Miller’s dividend policy of a firm is
D. None of these
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