E-PolyLearning

1. A project whose cash flows are more than the capital invested for rate of return then the net present value will be
a. positive
b. independent
c. negative
d. zero
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Answer: (a).positive

2. In the mutually exclusive projects, the project which is selected for comparison with others must have
a. higher net present value
b. lower net present value
c. zero net present value
d. all of the above
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Answer: (a).higher net present value

3. The relationship between Economic Value Added (EVA) and the Net Present Value (NPV) is considered as
a. valued relationship
b. economic relationship
c. direct relationship
d. inverse relationship
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Answer: (c).direct relationship

4. An uncovered cost at start of year is $200, full cash flow during recovery year is $400 and prior years to full recovery is 3 then payback would be
a. 5 years
b. 3.5 years
c. 4 years
d. 4.5 years
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Answer: (b).3.5 years

5. In capital budgeting, the positive net present value results in
a. negative economic value added
b. positive economic value added
c. zero economic value added
d. percent economic value added
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Answer: (b).positive economic value added

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