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Financial Management MCQs – Practice Test 2 (Chapter 2)

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Free "Basics of Capital Budgeting Evaluating Cash Flows" App (Android & iOS) with MCQ: An uncovered cost at the start of year is divided by full cash flow during recovery year then added in prior years to full recovery for calculating; with answers: investment period, original period, payback period, and forecasted period to strengthen finance understanding. Practice Binomial Approach Quiz Questions, download Apple Book (Free Chapter) to support finance learning.

Basics of Capital Budgeting Evaluating Cash Flows MCQ – Practice Test 2 PDF Download

MCQ 6: An uncovered cost at the start of year is divided by full cash flow during recovery year then added in prior years to full recovery for calculating:

  1. original period
  2. investment period
  3. payback period
  4. forecasted period

MCQ 7: In cash flow analysis, the two projects are compared by using common life, is classified as:

  1. transaction approach
  2. replacement chain approach
  3. common life approach
  4. Both B and C

MCQ 8: Other factors held constant, but the lesser project liquidity is because of:

  1. shorter payback period
  2. greater payback period
  3. less project return
  4. greater project return

MCQ 9: In capital budgeting, an internal rate of return of the project is classified as its:

  1. external rate of return
  2. internal rate of return
  3. positive rate of return
  4. negative rate of return

MCQ 10: In independent projects evaluation, the results of internal rate of return and net present value lead to:

  1. cash flow decision
  2. cost decision
  3. same decisions
  4. different decisions

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