1391. Profitability index, when applied to divisible projects, impliedly assumes that _______.

A. Project cannot be taken in parts
B. NPV is linearly proportionate to part of the project taken up
C. NPV is additive in nature
D. Both B and C *

1392. If there is no inflation during a period, then the money cash flow would be equal to _______.

A. Present value
B. Real cash flow *
C. Real cash flow + present value
D. Real cash flow + present value

1393. The real cash flows must be discounted to get the present value at a rate equal to ________.

A. Money discount rate
B. Inflation rate
C. Real discount rate *
D. Risk free rate of interest

1394. Real rate of return is equal to ________.

A. Nominal Rate * inflation rate
B. Nominal Rate / Inflation rate *
C. Nominal Rate – Inflation rate
D. Nominal Rate + Inflation rate

1395. If the real rate of return is 10% and inflation s money discount rate is _________.

A. 14.4% *
B. 2.55%
C. 15.0%
D. 15.0%

1396. If the money discount rate is 19% and inflation rate is 12% the real discount is _______.

A. 7%
B. 5%
C. 6%
D. 6.25 % *

1397. Money discount rate if equal to ________.

A. (1+Inflation rate)(1+Real rate)-1
B. (1+Inflation rate)4-(1+Real rate)-1
C. (1+ Real rate)4-(1+inflation rate)-1 *
D. (1+Real rate)+(1+inflation rate)-1

1398. Real discount rate is equal to ___________.

A. (1+Inflation rate)(1+Money Discount rate )-1
B. (1+Money discount rate)+(1+Inflation rate)-1
C. (1+Money discount rate)4-(1+Inflation rate)-1
D. (1+Money discount rate)-(1+Inflation rate )-1 *

1399. Two mutually exclusive projects with different economic lives can be compared on the basis of ________.

A. Internal Rate of return
B. Profitability Index
C. Net Present Value
D. Equivalent annuity value *

1400. Risk in capital budgeting implies that the decision-maker knows_ of the cash flows _____.

A. Variability
B. Probability *
C. Certainty
D. None of the above