Question 91 : In order to find out the present value of a sum of Rs. 10,000 to be received at the end of each year for the next 5 years at 10% rate, we use:

- Future value formula
- Present value formula
- Present value of annuity formula
- Future value of annuity formula

Question 92 : Which are the following options does not generate cash?

- Issue of security
- Redeem security
- Raises a bank loan
- Payment from firms customers

Question 93 : ABC Ltd is considering undertaking a project that would yield average annual profits (after depreciation) of Rs. 68,000 for 5 years. The initial outlay of the project would be Rs. 800,000. What would be the accounting rate of return for this project?

- 0.17
- 0.085
- 0.08
- 0.091

Question 94 : The process of calculating future values of cash flows is called

- Discounting
- Compounding
- Capital recovery
- Perpetuity

Question 95 : What is the weighted average cost of capital for a firm?

- Discount rate which the firm should apply to all of the projects it undertakes.
- Maximum rate which the firm should require on any projects it undertakes
- Overall rate which the firm must earn on its existing assets to maintain the value of its stock
- Rate the firm should expect to pay on its next bond issue

Question 96 : Acid test ratio is also known as __________

- Current ratio
- Net profit ratio
- Net sales ratio
- Quick ratio

Question 97 : What is PV of Rs 100 one year hence with discounting factor 25% ?

- Rs 125
- Rs 25
- Rs 250
- Rs 80

Question 98 : The concept of homemade leverage is most associated with:

- MM Proposition I with no tax.
- MM Proposition II with no tax.
- MM Proposition I with tax.
- MM Proposition II with tax.

Question 99 : Which of the following statements lends most support to the theory that dividend payments are irrelevant to the value of ordinary shares?

- Shareholders making homemade dividends face dealing costs
- Shareholders are concerned with total earnings rather than with the split between distributed and retained earnings.
- Investors' discount rates increase with time due to uncertainty.
- Firms have particular clienteles due to their dividend policy

Question 100 : A quick approximation of the typical firm's cost of equity may be calculated by

- Adding a 5 percent risk premium to the firm's before-tax cost of debt.
- Adding a 5 percent risk premium to the firm's after-tax cost of debt.
- Subtracting a 5 percent risk discount from the firm's before-tax cost of debt.
- Subtracting a 5 percent risk discount from the firm's after-tax cost of debt.