cash flow estimation and risk analysis

mcqspedia.com has 32 Question/Answers about Topic cash flow estimation and risk analysis

Situation in which company replaces existing assets with new assets is classified as

Situation in which company replaces existing assets with new assets is classified as
  • A. replacement projects
  • B. new projects
  • C. existing projects
  • D. internal projects
  • Correct Answer: Option A

Net investment in operating capital is $5000 and net operating profit after taxes is $8000 then free cash flow would be

Net investment in operating capital is $5000 and net operating profit after taxes is $8000 then free cash flow would be
  • A. $13,000
  • B. −$3000
  • C. $3,000
  • D. −$13000
  • Correct Answer: Option C

An investment outlay cash flow is $4000, operating cash flow is $1000 and salvage cash flow is $5000 then free cash flow would be

An investment outlay cash flow is $4000, operating cash flow is $1000 and salvage cash flow is $5000 then free cash flow would be
  • A. $10,000
  • B. $8,000
  • C. zero
  • D. none of above
  • Correct Answer: Option A

Free cash flow is $15000 and net investment in operating capital is $9000 then net operating profit after taxes will be

Free cash flow is $15000 and net investment in operating capital is $9000 then net operating profit after taxes will be
  • A. $24,000
  • B. $6,000
  • C. −$6000
  • D. −$24000
  • Correct Answer: Option A

Real interest rate and real cash flows do not include

Real interest rate and real cash flows do not include
  • A. equity effects
  • B. debt effects
  • C. inflation effects
  • D. opportunity effects
  • Correct Answer: Option C

An operating cash flows is $12000 and gross fixed asset expenditure is $5000 then free cash flow will be

An operating cash flows is $12000 and gross fixed asset expenditure is $5000 then free cash flow will be
  • A. −$7000
  • B. $7,000
  • C. $17,000
  • D. −$17000
  • Correct Answer: Option B

Economists consider effects of started project on other parts of company or on environment of company is called

Economists consider effects of started project on other parts of company or on environment of company is called
  • A. externalities
  • B. foreign effects
  • C. weighted effects
  • D. opportunity effects
  • Correct Answer: Option A

Nominal interest rates and nominal cash flows are usually reflected the

Nominal interest rates and nominal cash flows are usually reflected the
  • A. inflation effects
  • B. opportunity effects
  • C. equity effects
  • D. debt effects
  • Correct Answer: Option A

Weighted average cost of debt, preferred stock and common equity is classified as

Weighted average cost of debt, preferred stock and common equity is classified as
  • A. cost of salvage
  • B. cost of interest
  • C. cost of taxation
  • D. cost of capital
  • Correct Answer: Option D

An investment outlay cash flow is $2000, an operating cash flow is $1500 and salvage cash flow is $3000 then free cash flow would be

An investment outlay cash flow is $2000, an operating cash flow is $1500 and salvage cash flow is $3000 then free cash flow would be
  • A. $500
  • B. $2,500
  • C. 6.50%
  • D. $6,500
  • Correct Answer: Option D

Project which is started by firm for increasing sales is classified as

Project which is started by firm for increasing sales is classified as
  • A. new expansion project
  • B. old expanded project
  • C. firm borrowing project
  • D. product line selection
  • Correct Answer: Option A

Free cash flow is $15000, operating cash flow is $3000, investment outlay cash flow is $5000 then salvage cash flow will be

Free cash flow is $15000, operating cash flow is $3000, investment outlay cash flow is $5000 then salvage cash flow will be
  • A. $17,000
  • B. −$17000
  • C. $7,000
  • D. −$7000
  • Correct Answer: Option C

In capital budgeting, cost of capital is used as discount rate and is based on pre-determines

In capital budgeting, cost of capital is used as discount rate and is based on pre-determines
  • A. cost of inflation
  • B. cost of debt and equity
  • C. cost of opportunity
  • D. cost of transaction
  • Correct Answer: Option B

Cash flows that should be considered for decision in hand are classified as

Cash flows that should be considered for decision in hand are classified as
  • A. relevant cash flows
  • B. irrelevant cash flows
  • C. marginal cash flows
  • D. transaction cash flows
  • Correct Answer: Option A

In cash flow estimation, depreciation shelters company’s income from

In cash flow estimation, depreciation shelters company’s income from
  • A. expansion
  • B. salvages
  • C. taxation
  • D. discounts
  • Correct Answer: Option C

Free cash flow is $17000 and net investment in operating capital is $10000 then net operating profit after taxes would be

Free cash flow is $17000 and net investment in operating capital is $10000 then net operating profit after taxes would be
  • A. $7,000
  • B. $27,000
  • C. −$27000
  • D. −$7000
  • Correct Answer: Option B

Net investment in operating capital is subtracted from net operating profit after taxes to calculate

Net investment in operating capital is subtracted from net operating profit after taxes to calculate
  • A. relevant inflows
  • B. free cash flow
  • C. relevant outflows
  • D. cash outlay
  • Correct Answer: Option B

Double declining balance method and sum of years digits are included in

Double declining balance method and sum of years digits are included in
  • A. yearly method
  • B. single methods
  • C. double methods
  • D. accelerated methods
  • Correct Answer: Option D

Cash flows that could be generated from an owned asset by company but not use in project are classified as

Cash flows that could be generated from an owned asset by company but not use in project are classified as
  • A. occurred cost
  • B. mean cost
  • C. opportunity costs
  • D. weighted cost
  • Correct Answer: Option C

Free cash flow is $12000, an operating cash flow is $4000, an investment outlay cash flow is $5000 then salvage cash flow would be

Free cash flow is $12000, an operating cash flow is $4000, an investment outlay cash flow is $5000 then salvage cash flow would be
  • A. −$21000
  • B. $21,000
  • C. −$3000
  • D. $3,000
  • Correct Answer: Option D
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