Chapter Five: Capital Budgeting-Multiple Choice Questions (MCQ):

Chapter Five:  Capital Budgeting

Multiple Choice Questions (MCQ):

1. Which is the evaluation method of Investment below?

a. Capital budgeting

b. Time value of money

c. Selecting discount rate

d. Future value policy of investment

2. Which is the equation of calculating the payback time?

a. Yearly cash flow ÷ Investment

b. Investment ÷  Yearly cash flow  

c. Investment ÷  Yearly cash inflow

d. Yearly cash outflow ÷ Yearly cash inflow

3. What is called the difference between cash inflow and cash outflow?

a. Initial investment

b. Cash out flow

c. Total current cost

d. Total depreciation

4. Dr. Shamim has founded and directed a hospital by investing her own capital.

Which decision will she take through capital budgeting?

a. Medicine procurement

b. X-ray machine purchase

c. Medicine price fixation

d. Color change of hospital building

5. Which Technique of capital budgeting is important?

a. Project selection

b. Identify the objective of institution

c. Calculate profitability of project

d. Identify the rate of return

Read the passage and answer the question 6 & 7.

Chief managing director of Shemanto Company Miss. Borna has divided total profit by 4 before calculating the profitability of investment of 4 years without adding depreciation. But total investment has divided by 2.

6. Which method was followed by Mrs. Borna?

a. Average Rate of Return

b. Payback Time

c. Net Present Value

d. IRR

7. Limitation of the method mentioned in the stem –

i.  Time value of money is avoided

ii.  Value of all cash flow is equal

iii. Divide profit and investment by the different number.

Which one is correct?

a.  i & ii

b.  i & iii

c.  ii & iii

d.  i &ii &iii

[ Answer Key : 1(a), 2(b), 3(d), 4(a), 5(b), 6(a) & 7(a)]

Chapter Four: Risk and Uncertainty-Multiple choice questions(MCQ)

Chapter Four: Risk and Uncertainty

Multiple choice questions(MCQ)

1. What is the consequence of inability to pay office expenses, insurance etc.?

a. Financial loss    

b. Shortage of capital

c. Risk

d. Mismanagement in business

2. In which of the areas of business organizations risk plays a significant role?

a. In taking decisions   

b. In making plan

c. In management    

d. In collecting capital

3. Risk is measured by-

i.   Applying various techniques

ii. Developing a good plan

iii. Decreasing the cost of doing business which one of the following is correct?

a. i

b. iii

c. i and ii     

d. i and iii

[ Answer Key : 1(c), 2(a) & 3(d)]

Chapter Three: Time Value of Money-Multiple Choice Questions(MCQ):

Chapter Three: Time Value of Money

Multiple Choice Questions(MCQ):

1. What is the main reason of measuring the time value of money?

a. Interest rate

b. currency policy

c. liquidity

d. additional profit

2. Which of the following is given of principal with interest?

a. Simple interest

b. Compound interest

c. Total interest

d. Net interest

3. Discounting process means

i) Process of measuring the amount of discount

ii) Techniques to measure the present value of money

iii) Process of dividing principal with interest by the interest rate

Which one is correct?

a.  i & ii

b.  i & iii

c.  ii & iii

d.  i, ii & iii

4. Which factor of the following has vast importance in Time Value of Money?

a. Identify the interest rate

b. Investment decision taken

c. Measure financial condition

d. Decrease installment of loan

5. Withdrawing from the provident fund Mr. Harun wants to invest some money in Digital Bank at 12% interest rate for 5 years. Bank says, after 5 years bank will pay Tk. 5, 00,000.00. How much money Mr. Harun wants to deposit in Digital Bank?

a. Tk. 2,00,730.00

b. Tk. 2,83,720.00

c. Tk. 3,13,520.00

d. Tk. 4,40,000.00

Read the passage below and answer the question No.6, 7 and 8.

Due to the lack of personal fund Mr. Karim wants to purchase a fridge by taking loan against Tk. 1000.00 monthly installment for 10 years and for which he has to pay 12% interest rate.

6. Benefit given to Mr. Rezaul is under which policy?

a. Customer service

b. Consumer credit

c. Home loan

d. Opportunity cost.

7. What is the present value of Mr. Rezaul’s fridge?

a. Tk. 5,667.00

b. Tk. 56,667.00

c. Tk. 69,700.00

d. Tk. 1,20,000.00

8. Keeping other condition constant if interest rate becomes double as 24% --

i) The fridge will be bought at purchase price.

ii) Due loan will be double.

iii) Amount of loan will decrease.

Which one is correct?

a.  i & ii

b.  i & iii

c.  ii & iii

d.  i, ii & iii.

[ Answer Key : 1(a), 2(b), 3(c), 4(b), 5(b), 6(b), 7(c) & 8(b)]

Chapter Two: Sources of Finance-Multiple Choice Questions (MCQ):

Chapter Two: Sources of Finance  

Multiple Choice Questions (MCQ):

1. Which is the source of mid-term finance?

a. Micro Credit    

b. Specialized Financial Institution

c. Collect Advances from Purchasers 

d. Discounting the Bills Receivable

2. Factors that are considered to solve the financial problems of business organizations are -

i. Cost of Capital Supply

ii. Importance and Objectives of capital

iii. Different types of benefits

Which one of the following is correct?

a. i and ii  

b. i and iii

c. ii and iii  

d. i, ii and iii 

Read the following passage and answer the questions no. 3 and 4

Mr. Bazlur, a businessman of garment industry, has rented some necessary machines and equipments  for 3 years. Within a very short time he became very famous in the business field.

3. What sources Mr. Bazlur has taken support from for fund collection?

a. Advances from purchasers  

b. Leasing

c. Debenture    

d. Commercial Paper

4. What of the following Mr. Bazlur has given importance for in fund collection?

a. Necessity of utilizing savings fund

b. No need of long term loan collection

c. Applicable dividend loan

d. Paying compulsory interest.

[ Answer Key : 1(b), 2(a), 3(b) & 4(d)]