Profitability Index MCQ (Multiple Choice Questions) PDF Download

An uncovered cost at start of year is $200, full cash flow during recovery year is $400 and prior years to full recovery is 3 then payback would be

1. 5 years
2. 3.5 years
3. 4 years
4. 4.5 years

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

The modified rate of return and modified internal rate of return with exceed cost of capital if the net present value is

1. positive
2. negative
3. zero
4. one

The number of years forecasted to recover an original investment is classified as

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

The process in which the managers of the company identify projects to add value is classified as

1. capital budgeting
2. cost budgeting
3. book value budgeting
4. equity budgeting