Capital Budgeting Decisions-quiz to check your knowledge!
The term Capital Budgeting refers to the long-term planning for proposed capital outlays or expenditure for the purpose of maximizing return on investments. Normally such decisions where investment of money and expected benefits arising therefrom are spread over more than one year, it includes both raising of long-term funds as well as their utilization.
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- Question 1 of 10
1. Question1 points
A condition in which the business enterprises are not able to accept all the projects on account of external or internal fund constraints is calledCorrect
Capital rationing is the situation in which business enterprises are not able to accept all the projects on account of external or internal fund constraints.Incorrect
- Question 2 of 10
2. Question1 points
Which is the difference between the present value of future cash inflows and present value of future cash outflowsCorrect
Net Present Value is the difference between the present value of future cash inflows and present value of future cash outflows .Incorrect
- Question 3 of 10
3. Question1 points
The situation where the present value of cash inflows is equal to the value of investment made is calledCorrect
Internal Rate of Return is the situation where the present value of cash inflows is equal to the value of investment.Incorrect
- Question 4 of 10
4. Question1 points
Capital rationing is further classified intoCorrect
Capital rationing may be hard capital rationing or soft capital rationing.Incorrect
- Question 5 of 10
5. Question1 points
The ratio of present value of cash inflows over the present value of cash outflows is calledCorrect
Pofitability index is ratio of present value of cash inflows over the present value of cash outflows.Incorrect
- Question 6 of 10
6. Question1 points
Net Present Value isCorrect
Net present value is absolute measurement technique.Incorrect
- Question 7 of 10
7. Question1 points
The ascertainment of risk level associated with the project is calledCorrect
Risk evaluation is the technique of ascertainment of risk level associted with the project.Incorrect
- Question 8 of 10
8. Question1 points
The term used for computing various returns on account of change in underlying assumption isCorrect
Sensivity analysis is the concept for computing various returns on account of change in underlying assumption.Incorrect
- Question 9 of 10
9. Question1 points
The criteria for seclection of a project in case of Profitability Index is whenCorrect
The criteria for seclection of a project in case of Profitability Index is when greater than one.Incorrect
- Question 10 of 10
10. Question1 points
In case of NPV method the investment is madeCorrect
In case of NPV method the investment is made at cut off rate.Incorrect