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Financial Management MCQ Questions and Solutions with Explanations | Commerce

Financial Management MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Financial Management MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-10 section-5

Each section contains 100 MCQs on Financial Management .
91
Cash flow which starts negative then positive than again positive cash flow is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Cash flow which starts negative then positive than again positive cash flow is classified as non-normal cash flow. Non-normal cash flow stream (also called unconventional cash flow) is a pattern of cash flows in which the direction of cash flows changes more than once. It is also termed as unconventional cash flow.
92
In estimating value of cash flows, compounded future value is classified as its
Discuss
Answer & Solution
Answer: Option A
Solution:
In estimating value of cash flows, compounded future value is classified as its terminal value. Terminal value (TV), or horizon value, determines the value of a business or project beyond the forecast period when future cash flows can be estimated.
93
In capital budgeting, a technique which is based upon discounted cash flow is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
In capital budgeting, a technique which is based upon discounted cash flow is classified as net present value method. Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.
94
An increase in marginal cost of capital and capital rationing are two arising complications of
Discuss
Answer & Solution
Answer: Option C
Solution:
An increase in marginal cost of capital and capital rationing are two arising complications of optimal capital budget. The optimal capital budget is an amount of investment that allows shareholder value to be maximized.
95
An initial cost is Rs 6000 and probability index is 5.6 then present value of cash flows will be
Discuss
Answer & Solution
Answer: Option C
Solution:
Present value of cash flow = Initial cost × Profitability index = 6000 × 5.6 = Rs. 33600.00.
96
In large expansion programs, increased riskiness and floatation cost associated with project can cause
Discuss
Answer & Solution
Answer: Option A
Solution:
In large expansion programs, increased riskiness and floatation cost associated with project can cause rise in marginal cost of capital. Marginal cost of capital is the weighted average cost of the last dollar of new capital raised by a company. It is the composite rate of return required by shareholders and debt-holders for financing new investments of the company.
97
Cash inflows are revenues of project and are represented by
Discuss
Answer & Solution
Answer: Option D
Solution:
Cash inflows are revenues of project and are represented by positive numbers.
98
Present value of future cash flows is Rs 4150 and an initial cost is Rs 1300 then profitability index will be
Discuss
Answer & Solution
Answer: Option B
No explanation is given for this question. Let's Discuss on Board
99
Project whose cash flows are less than capital invested for required rate of return then net present value will be
Discuss
Answer & Solution
Answer: Option A
Solution:
Project whose cash flows are less than capital invested for negativerequired rate of return then net present value will be negative.
100
A type of project whose cash flows would not depend on each other is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
A type of project whose cash flows would not depend on each other is classified as independent projects. A project whose acceptance or rejection is independent of the acceptance or rejection of other projects.