**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