Answer sheet for - "New_Assignment_Financial Management_1"

Scored:
28 /
30
Time taken: 11 Min , 51 Sec

1. When a project's cash outflow is 2,40,000 followed by the cash inflows of 50,000 per year for a
period of 8 years with a cost of capital of 11%, then the NPV is:
When a project's cash outflow is 2,40,000 followed by the cash inflows of 50,000 per year for a period of
8 years with a cost of capital of 11%, then the NPV is:

2 / 2 Marks Correct

19400

17305
 

18306

16445


Comments

2. Sensitivity analysis is used to vary more than one variable at a time so that the combined effects
of changes in the variables can be seen. (True/False)
Sensitivity analysis is used to vary more than one variable at a time so that the combined effects of
changes in the variables can be seen. (True/False)

0 / 2 Marks Incorrect

TRUE

FALSE
 


Comments

3. The most significant goal or objective of financial management is:

The most significant goal or objective of financial management is:

2 / 2 Marks Correct

Profit maximisation

Using business assets effectively

Wealth maximisation
 
 Matching income and expenditure


Comments

4. The longer the payback period, the riskier is the investment proposal since long-term estimations
are considered to be less reliable. (True/False)
The longer the payback period, the riskier is the investment proposal since long-term estimations are
considered to be less reliable. (True/False)

2 / 2 Marks Correct

TRUE
 

FALSE


Comments

5. A complete set of financial statements generally comprises which of the following?

A complete set of financial statements generally comprises which of the following?

2 / 2 Marks Correct

Balance sheet

Statement of profit and loss

Cash flow statement

All of these
 


Comments

6. If FV = 5,200, i = 5% and n = 6 years, then the present value (P) of a cash flow is equal to:
If FV = 5,200, i = 5% and n = 6 years, then the present value (P) of a cash flow is equal to:

2 / 2 Marks Correct

3880
 

2800

2500

None of these
 
Comments

7. When compounding is done for more than once in a year, the effective interest rate or the actual
annualised interest rate shall be lower than the real or nominal rate of interest. (True/False)
When compounding is done for more than once in a year, the effective interest rate or the actual
annualised interest rate shall be lower than the real or nominal rate of interest. (True/False)

2 / 2 Marks Correct

TRUE

FALSE
 


Comments

8. External analysis is useful for managerial decision-making and drawing reliable conclusions and
is prepared on the basis of information gathered through internal and unpublished records.
(True/False)
External analysis is useful for managerial decision-making and drawing reliable conclusions and is
prepared on the basis of information gathered through internal and unpublished records. (True/False)

2 / 2 Marks Correct

TRUE

FALSE
 


Comments

9. At the time of company's liquidation, equity shareholders can exercise their claim on assets even
when the claims of other contributors of capital have not been met. (True/False)
At the time of company's liquidation, equity shareholders can exercise their claim on assets even when
the claims of other contributors of capital have not been met. (True/False)

2 / 2 Marks Correct

TRUE

FALSE
 


Comments
10. Financial statements assist in prediction of the firm's capacity to earn profits. (True/False)
Financial statements assist in prediction of the firm's capacity to earn profits. (True/False)

2 / 2 Marks Correct

TRUE
 

FALSE


Comments

11. Equity shares are characterised by which of the following statements?

Equity shares are characterised by which of the following statements?

2 / 2 Marks Correct

Have an unlimited life hold voting rights and receive dividends

 

Have a limited life do not hold voting rights but are entitled to receive dividends

Have a limited life hold voting rights and are entitled to receive dividends

Have an unlimited life hold voting rights but do not receive dividends


Comments

12. The objective of wealth maximisation takes into account which of the following?
The objective of wealth maximisation takes into account which of the following?

2 / 2 Marks Correct

Timing of expected returns

Risk and uncertainty related to returns

Amount of returns expected

All of these
 


Comments

13. The certainty equivalent approach is an indicator of which of the following?

The certainty equivalent approach is an indicator of which of the following?

2 / 2 Marks Correct
 Equivalent value of Net Present Value

Significant factor in Decision Tree Analysis

Expected return over the lifetime of an investment project

Guaranteed return from an investment after adjusting for risk

 


Comments

14. Common-size financial statements are an example of vertical analysis. (True/False)

Common-size financial statements are an example of vertical analysis. (True/False)

2 / 2 Marks Correct

TRUE
 

FALSE


Comments

15. When NPV is greater than zero, the investment proposal should be rejected.
When NPV is greater than zero, the investment proposal should be rejected.

2 / 2 Marks Correct

TRUE

FALSE
 


Comments