C3: Which of the folowing methods is not used in capital budgeting:

B. Internal rate of return Method

C3: Which of the following statement is correct?

B. Sunk cost is an expenditure occured prior making decision of selecting projects

A. Sunk cost is an expenditure occurred after making decision of selecting projects

C. Sunk cost should not be ignored ni project cash flow estimate

D. Sunk cost is a relevant cost that should be consider ni project cash flow analysis

C2: Investment efficiency of a particular project reflects:

B. The relationship between benefits and costs of a project

A. The relationship between revenue and operating expenses of a project

C. The relationship between sales and variable costs of a project

D. The relationship between revenue and total fixed costs of a project

C2: 3. Accounting rate of return (ARR) measures

A. Average after tax accounting profit per average investment value

B. Average before tax accounting profit per average investment value

C. Average EBIT per average investment value

D. Average EBT per average investment value

C2: For mutually exclusive projects, based on ARR, a particular project will be accepted if

C. It has the highest ARR, which si also higher than the targeted AR

A. Its ARR is higher than the predetermined ARR

B. Its ARR is lower than the predetermined ARR

D. It has the lowest ARR, which is also lower than the targeted ARR

C2: Which of the following is NOT the advantages of simple Payback technique?

D. Considering the time value of money

A. Calculation is simple and easy to understand

B. Providing an insight into risk assessment

C. Suitable to firms with liquidity concern

C2: Which of the following equations measures NPV of a project?

A. PV (CF t) at a particular discount rate - CFO

B. PV (CF t) at aparticular discount rate -CF1

C. PV(Revenue t)ataparticulardiscountrate-CFO

D. PV (Revenue t) at a particular discount rate - CFO

C2: Which of the following is NOT the advantages of NPV technique?

D. Consider the accounting profit over awhole life of a project

A. Consider the time value of money

B. Consider the inflation, risk, and cost of capital

C. Consider the incremental cash flows

C2: Which of the folowing si the disadvantage of NPV technique?

D. Sensitive ot the discount rate

A. Ignore the time value of money

B. Ignore the cash flows beyond the cut-off date

C2: Operating Break-even point refers to the point at which:

B. Total operating costs equal to total revenues

A. Total operating costs equal ot total EBIT

C. Total operating costs equal to total EBT

D. Total operating costs equal ot total Net Income

Capital Budgeting is the process of planning, analyzing, and determining......

Which long-lived projects are worthy to invest in

Which short-term assets are worthy to invest in

Which fixed assets are worthy to invest in

Which financial assets are worthy to invest in

Long-term investment of a company refers to.....

The process of using capital to form necessary assets for future economic benefits

The process of using capital to buy stocks for capital gains

The process of using capital to buy materials for current operating activities

The process of using capital to repay interest expense

Which of the following statements is true regarding the features of long-term investment

Long-terms investment requires a huge amount of money and takes a long time

Long-terms investment requires a huge amount of money but low risk

Long-terms investment requires a huge amount of money but no uncertainty

Long-terms investment requires a huge amount of money and brings high return

Based on the structure of investment, long-term investment of a company consists of:

Fixed assets, Working Capital, Financial Investment

Small Investment, Medium Investment, Large Investment

Internal Investment, Boundary Investment, and External Investment

Forming Investment, Maintaining Investment, and Expanding Investment

Four main characteristics of an investment project are

Specific objectives, results, activities, and resources

Genaral objectives, results, activities, and funds

Specific objectives, results, activities, and funds

General objectives, vision, activities, and resources

A right long-term investment decision can:

eliminate the current product line

External factors affecting the long-term investment decision of a company include:

Interest rate, Technology development and market competition

Interest rate, government policy, financial capacity

Tax policy, Interest rate, risk tolerance of managers

Tax policy, Technology development, risk tolerance of managers

To determine the capital budgeting cash flows, two statement should be considered: (1) incremental cash flows are used to evaluate the investment potential (2) sunk cost is excluded from the cash flows Which of the following combination is TRUE?

(1) is correct, (2) is not correct

(1) is not correct, (2) is correct

(1) is not correct, (2) is not correct

To determine the capital budgeting cash flows, two statements should be considered: (1) opportunity cost is relevant, (2) interest expense should be considered in the capital budgeting. Which of the following combinations is TRUE?

(1) is correct, (2) is not correct

(1) is not correct, (2) is correct

(1) is not correct, (2) is not correct

Blue Stone company is considering an investment in a new product line. The company estimates that the new product line can increase the sales of the current product lines by 1 billion VND per year. This situation reflects:

A synergy effect of new investment

An erosion effect of new investment

An opportunity cost of new investment

The cash flows of an investment project consist of:

Cash inflows, Cash outflows, Net cash flows

Cash outflows, Operating cash flows, Net cash flows

Cash inflows, Operating cash flows, Initial Investment

Cash outflows, Operating cash flows, Initial Investment

TCDN2

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

C3: Which of the following is not a cause for the conflict between IRR and NPV method?

A. IRR ignores the size of initial investment

B. The assumption about reinvested rate of Cash flows ni NPV si different from that in IRR

C The timing problem of cash flows

D. The calculation skill of management

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

C3: Which technique is used for capital rationing?

A. P P

B. PI

D. IRR

C. NPV

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

C3: In capital budgeting, when a company has a set of attractive projects yet facing the budget constraint, it refers to the situation of:

A. Unequal life project evaluation

B. Conflict between IRR and NPV method

C. Asset replacement

D. Capital rationing

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

C3: To deal with capital rationing, acompany must:

A. Choose a combination of potential projects to meet the budget limit and maximize shareholder's wealth

B. Determine the cross-over rate and choose the project with higher positive NPV at discount rate

C. Determine the incremental cash flows and calculate NPV of new aset

D. Calculate EA of each project and choose hte project with hte highest EAA

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

C3: To determine how sensitive a NPV calculation is to changes if a particular variable is changed, managers should apply:

A. Statistical approach

B. Risk-adjustment approach

C. Sensitivity analysis

D. Decision Tree analysis

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

C3: Which of the following is the disadvantage of sensitivity analysis?

A. Assign probability to each outcome is subjective

B. Forecast process is complicated in case of multiple period project

C. Difficult to estimate the risk premium

D. Ignore the interdependent relationships among input variables

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

C3: The profitability index si computed by dividing the

A. Total cash flows by the initial investment

B. Present value of cash flows by the initial investment

C. Initial investment by the total cash flows

D. Initial investment by the present value of cash flows

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TCDN2

C3: Which of the following is not a cause for the conflict between IRR and NPV method?

C3: Which technique is used for capital rationing?

C3: In capital budgeting, when a company has a set of attractive projects yet facing the budget constraint, it refers to the situation of:

C3: To deal with capital rationing, acompany must:

C3: To determine how sensitive a NPV calculation is to changes if a particular variable is changed, managers should apply:

C3: Which of the following is the disadvantage of sensitivity analysis?

C3: The profitability index si computed by dividing the

C3: Which of the folowing methods is not used in capital budgeting:

C3: Which of the following statement is correct?

C2: Which of the folowing indicators si not used for evaluating Investment Efficiency from a financial perspective?

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