1381. Which of the following is not applied in capital budgeting ?

A. Cash flows be calculated in incremental terms
B. All costs and benefits are measured on cash basis
C. All accrued costs ad revenues be incorporated *
D. All benefits are measured on after tax basis

1382. Evaluation of capital budgeting proposals is based on cash flows because _______.

A. Cash flows are easy to calculate
B. Cash flows are suggested by SEBI
C. Cash is more important than profit *
D. None of the above

1383. Which of the following is not included in incremental A flows ?

A. Opportunity Costs
B. Sunk costs *
C. Change in Working capital
D. Inflation effect

1384. A proposal is not a capital budgeting proposal if it _______.

A. Is related to fixed assets
B. Brings long-term benefits
C. Brings short-term benefits only *
D. has very large investment

1385. In capital budgeting, sunk cost is excluded because it is ________.

A. Of small amount
B. Not incremental *
C. Not reversible
D. All of the above

1386. Savings in respect of a cost is treated in capital budgeting as ________.

A. An inflow *
B. An outflow
C. Nill
D. None of the above

1387. In capital budgeting the term capital rationing implies ______.

A. That no retained earnings available
B. That limited funds are available for investment *
C. That no external funds can be raised
D. That no fresh investment is required in current year

1388. Feasibility set approach to capital rationing can be applied in ___________.

A. Accept-reject situation *
B. Divisible projects
C. Mutually exclusive projects
D. None of the above

1389. In case of divisible projects, which of the following can be used to attain maximum NPV?

A. Feasibility set approach
B. Internal rate or return
C. Profitability index approach *
D. Any of the above

1390. In case of the indivisible projects, which of the following may not give the optimum result?

A. Internal rate of return
B. Profitability index
C. Feasibility set approach *
D. All of the above