This quiz works best with JavaScript enabled. Home > Corporate Finance > Capital Budgeting > Capital Budgeting – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Capital Budgeting Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Investment proposals that are mutually exclusive have the following characteristics, except A) One of the various alternative proposals must be chosen. B) The nature of projects is different. C) The nature of the project is the same. D) There is no true choice. Show Answer Correct Answer: B) The nature of projects is different. 2. The safety environment project has characteristics A) Nonrevenue-producing project. B) Replacement of old Assets. C) New Business Expansion. D) Don't know. Show Answer Correct Answer: A) Nonrevenue-producing project. 3. Capital Budgeting is A) Capital Expansion. B) Capital Equipment. C) Capital Budgeting. D) None of above. Show Answer Correct Answer: C) Capital Budgeting. 4. Investment appraisal criteria that measure the payback period for all costs incurred A) Payback Period. B) Net Present Value. C) Internal Rate of Return. D) Profitability Index. Show Answer Correct Answer: A) Payback Period. 5. If PVCIF is Rp 850.000 and PVCOF is Rp. 450.000 then NPV is ..... A) Rp. 400.000. B) Rp. 40.000. C) Rp. 40.000.000. D) Rp. 130.000. Show Answer Correct Answer: A) Rp. 400.000. 6. You must know the discount rate of an investment project to compute its A) NPV, IRR, PI, and discount payback period. B) NPV, PI, discount payback period. C) NPV, PI, IRR. D) NPV, accounting rate of return, PI, discount payback period. Show Answer Correct Answer: B) NPV, PI, discount payback period. 7. Investments whose profit cannot be measured are the exception A) Promotion expenses. B) Installation of waste water cleaning installations. C) Research and development costs. D) Employee training and education program costs. Show Answer Correct Answer: B) Installation of waste water cleaning installations. 8. In capital budgeting, risk refers to A) The chance that a project will prove acceptable. B) The conflicting IRR and NPV in a project. C) The degree of variability of initial outlay. D) The uncertainty of cash inflows. Show Answer Correct Answer: D) The uncertainty of cash inflows. 9. The payback method assumes that all cash inflows are reinvested to yield a return equal to A) The internal rate of return. B) Zero. C) The discount rate. D) The hurdle rate. Show Answer Correct Answer: B) Zero. 10. This answers the question, "How much is my asset worth right now? " A) Net present value. B) Internal rate of return. C) Discount rate. D) Capital budgeting. Show Answer Correct Answer: A) Net present value. 11. The investment proposal with the greatest relative risk would have A) The highest standard deviation of net present value. B) The highest coefficient of variation of net present value. C) The highest expected value of net present value. D) The lowest opportunity loss likelihood. Show Answer Correct Answer: B) The highest coefficient of variation of net present value. 12. The project is accepted if A) If the profitability index is equal to one. B) The funds are unlimited. C) If the profitability index is greater than on. D) Both (B) and (C). Show Answer Correct Answer: C) If the profitability index is greater than on. 13. Which of the following capital budgeting techniques ignores time value of money? A) Internal Rate of Return. B) Payback period. C) Net Present Value. D) Profitability index. Show Answer Correct Answer: B) Payback period. 14. Full name of the acronyms NPV A) Network Present Value. B) Net Particular Value. C) Net Present Value. D) Net Presenting Value. Show Answer Correct Answer: A) Network Present Value. 15. An investment plan requires an initial investment (differential accounting) of Rp. 90,000,000, - estimated cash profit after tax / year for 5 consecutive years, namely 15 million / year, what is the payback period? A) 7 years. B) 6 years. C) 5 years. D) 6.5 Years. Show Answer Correct Answer: B) 6 years. 16. A situation in which accepting one investment prevents the acceptance of another investment is called the: A) Net present value profile. B) Operational ambiguity decision. C) Mutually exclusive investment decision. D) Issues of scale problem. Show Answer Correct Answer: C) Mutually exclusive investment decision. 17. Which of the following criterion is often preferred A) A) Net present value. B) (B) Profitability index. C) C) Internal Rate of Return. D) D) All of the above. Show Answer Correct Answer: D) D) All of the above. 18. Which of the following capital budgeting techniques are used under "capital rationing"conditions? A) Net present value. B) Internal rate of return. C) Payback period. D) Profitability index. Show Answer Correct Answer: D) Profitability index. 19. Assume that a hospital wishes to invest $205,570.50 in an ultrasound device that is expected to generate a cash inflow of $50,000 per year for 6 years. Calculate the IRR of the investment? A) 10%. B) 11%. C) 12%. D) 13%. Show Answer Correct Answer: C) 12%. 20. What is the present value of $ 1 received five years from now if the annual rate of return is 12%? A) $ 1.76. B) $ 0.57. C) $ 1.00. D) $ 1.60. Show Answer Correct Answer: B) $ 0.57. Next →Related QuizzesCorporate Finance QuizzesCapital Budgeting Quiz 2Capital Budgeting Quiz 3Capital Budgeting Quiz 4Capital Budgeting Quiz 5 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books