Financial Management

461. Which of the following is not incorporated in Capital Budgeting?

1. Tax-Effect
2. Time Value of Money
3. Required Rate of Return
4. Rate of Cash Discount

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462. Which of the following is not true for capital budgeting?

1. Sunk costs are ignored
2. Opportunity costs are excluded
3. Incremental cash flows are considered
4. Relevant cash flows are considered

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463. Savings in respect of a cost is treated in capital budgeting as:

1. An Inflow
2. An Outflow
3. Nil
4. None of the above

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464. Real rate of return is equal to:

1. Nominal Rate × Inflation Rate
2. Nominal Rate ÷ Inflation Rate
3. Nominal Rate - Inflation Rate
4. Nominal Rate + Inflation Rate

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465. Nominal Rate ÷ Inflation Rate

1. (1 + Inf. Rate) (1 + Money D Rate)-1
2. (1 + Money D Rate) + (1 + Inf. Rate)-1
3. (1 + Money D Rate) 4- (1 + Inf. Rate)-1
4. (1 + Money D Rate) - (1 + Inf. Rate)-1

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466. Which is the most expensive source of funds?

1. New Equity Shares
2. New Preference Shares
3. New Debts
4. Retained Earnings

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467. Cost Capital for Equity Share Capital does not imply that:

1. Market Price is equal to Book Value of share
2. Shareholders are ready to subscribe to right issue
3. Market Price is more than Issue Price
4. AC of the three above

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468. Advantage of Debt financing is

1. Interest is tax-deductible
2. It reduces WACC
3. Does not dilute owners control
4. All of the above

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469. Operating leverage arises because of:

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

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470. Business risk can be measured by:

1. Financial leverage
2. Operating leverage
3. Combined leverage
4. None of the above

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