Financial Management

321. If there is no inflation during a period, then the Money Cashflow would be equal to:

1. Present Value
2. Real Cash flow
3. Real Cash flow + Present Value
4. Real Cash flow - Present Value

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322. Money Discount Rate if equal to:

1. (1 + Inflation Rate) (1 + Real Rate)-1
2. (1 + Inflation Rate) 4- (1 + Real Rate)-1
3. (1 + Real Rate) 4- (1 + Inflation Rate)-1
4. (1 + Real Rate) + (1 + Inflation Rate)-1

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323. Which of the following is a risk factor in capital budgeting?

1. Industry specific risk factors
2. Competition risk factors
3. Project specific risk factors
4. All of the above

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324. Which of the following sources of funds has an Implicit Cost of Capital?

1. Equity Share Capital
2. Preference Share Capital
3. Debentures
4. Retained earnings

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325. Marginal cost of capital is the cost of:

1. Additional Sales
2. Additional Funds
3. Additional Interests
4. None of the above

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326. Cost of Redeemable Preference Share Capital is:

1. Rate of Dividend
2. After Tax Rate of Dividend
3. Discount Rate that equates PV of inflows and out-flows relating to capital
4. None of the above

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327. Debt Financing is a cheaper source of finance because of:

1. Time Value of Money
2. Rate of Interest
3. Tax-deductibility of Interest
4. Dividends not Payable to lenders

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328. Cost of Equity Share Capital is more than cost of debt because:

1. Face value of debentures is more than face value of shares
2. Equity shares have higher risk than debt
3. Equity shares are easily saleable
4. All of the three above

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329. Financial Leverage arises because of:

1. Fixed cost of production
2. Variable Cost
3. Interest Cost
4. None of the above

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330. FL is zero if:

1. EBIT = Interest
2. EBIT = Zero
3. EBIT = Fixed Cost
4. EBIT = Pref. Dividend

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