Capital Budgeting or Capital Investment Decisions MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Capital Budgeting or Capital Investment Decisions, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Capital Budgeting or Capital Investment Decisions MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Capital Budgeting or Capital Investment Decisions mcq questions that explore various aspects of Capital Budgeting or Capital Investment Decisions problems. Each MCQ is crafted to challenge your understanding of Capital Budgeting or Capital Investment Decisions principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Capital Budgeting or Capital Investment Decisions MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Capital Budgeting or Capital Investment Decisions. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Capital Budgeting or Capital Investment Decisions knowledge to the test? Let's get started with our carefully curated MCQs!

Capital Budgeting or Capital Investment Decisions MCQs | Page 7 of 7

Discover more Topics under IC 89 Management Accounting

Q61.
What does the Modified Internal Rate of Return (MIRR) method do to overcome a drawback of the IRR method?

a.

It considers interim positive cash flows for a more realistic evaluation

b.

It discounts cash flows at a higher rate

c.

It assumes that interim positive cash flows are reinvested at the rate of the project that generated them

d.

It reinvests earlier cash flows at the firm's rate of return arriving at terminal value

Discuss
Answer: (d).It reinvests earlier cash flows at the firm's rate of return arriving at terminal value Explanation:Under the Modified Internal Rate of Return method, earlier cash flows are reinvested at the firm's rate of return, overcoming the unrealistic assumption of the IRR method.
Q62.
In ______________, a variety of aspects are randomly tested and results are put into use to identify associated risks and to make proper analysis thereof.

a.

Simulation Analysis

b.

Cost-Benefit Analysis

c.

Financial Feasibility

d.

Technical Feasibility

Discuss
Answer: (a).Simulation Analysis Explanation:In Simulation Analysis, a variety of aspects are randomly tested to identify associated risks and make a proper analysis.
Q63.
Under which of the following methods of capital budgeting is the rate of return determined on the figures or data for income and investment derived from accounting statements?

a.

Payback method

b.

Rate of Return on Original Investment Method

c.

Discounted Cash Flow Method

d.

Internal Rate of Return (IRR) Method

Discuss
Answer: (b).Rate of Return on Original Investment Method Explanation:In the Rate of Return on Original Investment Method, the rate of return is determined based on the figures or data for income and investment derived from accounting statements.
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