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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-5 section-5

Each section contains 100 MCQs on Financial Management .
41
Capital budgeting decisions are analyzed with help of weighted average and for this purpose
Discuss
Answer & Solution
Answer: Option C
Solution:
Capital budgeting decisions are analyzed with help of weighted average and for this purpose cost of capital is used. Capital budgeting is a company's formal process used for evaluating potential expenditures or investments that are significant in amount.
42
A formula of after-tax component cost of debt is
Discuss
Answer & Solution
Answer: Option A
Solution:
A formula of after-tax component cost of debt is interest rate-tax savings. Cost of debt refers to the effective rate a company pays on its current debt. In most cases, this phrase refers to after-tax cost of debt, but it also means the company's cost of debt before taking taxes into account.
43
Risk free rate is subtracted from expected market return is considered as
Discuss
Answer & Solution
Answer: Option C
Solution:
Risk free rate is subtracted from expected market return is considered as equity risk premium. Equity risk premium refers to the excess return that investing in the stock market provides over a risk-free rate.
44
Type of variability in which a project contributes in return of company is considered as
Discuss
Answer & Solution
Answer: Option D
Solution:
Type of variability in which a project contributes in return of company is considered as variable risk and within firm risk.
45
Rate of required return by debt holders is used for estimation the
Discuss
Answer & Solution
Answer: Option A
Solution:
Rate of required return by debt holders is used for estimation the cost of debt. Cost of debt refers to the effective rate a company pays on its current debt. In most cases, this phrase refers to after-tax cost of debt, but it also means the company's cost of debt before taking taxes into account.
46
A project whose cash flows are more than capital invested for rate of return then net present value will be
Discuss
Answer & Solution
Answer: Option A
Solution:
A project whose cash flows are more than capital invested for rate of return then net present value will be positive.
47
In mutually exclusive projects, project which is selected for comparison with others must have
Discuss
Answer & Solution
Answer: Option A
Solution:
In mutually exclusive projects, project which is selected for comparison with others must have higher net present value. A positive net present value indicates that the projected earnings generated by a project or investment - in present dollars - exceeds the anticipated costs, also in present dollars. It is assumed that an investment with a positive NPV will be profitable, and an investment with a negative NPV will result in a net loss.
48
Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is considered as
Discuss
Answer & Solution
Answer: Option C
Solution:
Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is considered as direct relationship.
49
An uncovered cost at start of year is Rs 200, full cash flow during recovery year is Rs 400 and prior years to full recovery is 3 then payback would be
Discuss
Answer & Solution
Answer: Option B
No explanation is given for this question. Let's Discuss on Board
50
In capital budgeting, positive net present value results in
Discuss
Answer & Solution
Answer: Option B
Solution:
In capital budgeting, positive net present value results in positive economic value added. Capital budgeting is the process a business undertakes to evaluate potential major projects or investments.