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Time: 11.30am -12.10 pm Name: Invigilator: HT Number: I have seen my marks _________________ ( Signature of the student with date) Multiple Choice Questions (10 x = 5) 1. In ARR, A stands for [ ] a) Average b) Annual c) Annual d) None 2. In NPV, N stands for [ ] a) Net b) Non b) Nominal d) None 3. In CFAT , AT stands for [ ] a) At Taxes b) After Taxes c) Annual Tax d) None 4. Capital Budgeting refers to investing in.. [ ] a) Shares b) Debentures c) Long Term Assets d) Current Assets 5. NPV = ? [ ] a) Total of Cash Inflows b) Difference of Cash Inflows and Out Flows c) Total Profit d) None 6. Expand PI [ ] a) Profitability Index b) Profit Income c) Present Index d) None 7. K = _______________________in capital budgeting. [ ] a) Kin b) Cost of Capital c) Profit d) Liability 8. Formula of PI=_ [ ] a) Profit/Interest b) PV of Cash Inflows/PV of Cash Outflows c) PV of Cash Outflows/PV of Cash Inflows d) PV of Cash Inflows - PV of Cash Outflows 9. Formula of NPV=_ [ ] a) Profit/Interest b) PV of Cash Inflows/PV of Cash Outflows c) PV of Cash Outflows/PV of Cash Inflows d) PV of Cash Inflows - PV of Cash Outflows 10. A project costs Rs. 4,00,000. Annual returns are Rs.50,000 per annum for 10 years. Then pay back period = __ years [ ] a) 1 b) 2 c) 4 d) 8 Fill in the blanks (10 x = 5) 11. _________________ is the lifeblood of business. 12. ________________ is the rate at which PV of cash inflows will be equal to investment. 13. __________________ is also known as Benefit to Cost Ratio 14. DCF refers to ____________ Cash Flows 15. Expand IRR____________________________________________ 16. First goal of Financial Management is to maximise ________________ 17. _________________________________ is a rate at which NPV is zero 18. RADR stands for ________ ______________ ______________ ________ 19. __________ is the return on Equity 20. _____________ is the return on Debt
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25. Explain the advantages of modern techniques (DCF) over traditional methods of capital budgeting.