December 2015 - Paper 3

31:   From investor's point of view, the cost of capital is :
A.

Interest Rate

B.

Market Value

C.

Yield of Capital Sacrifice

D.

Stock Exchange Value

 
 

Option: C

Explanation :

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32:   Formula for net cash inflow of a project is :
A.

Sales - Operating Expenses - Interest - Tax

B.

Sales - Operating Expenses

C.

Net Profit after tax + Depreciation

D.

Gross Profit + Depreciation

 
 

Option: C

Explanation :

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33:   Concentration Banking is a method of :
A.

Decentralised collection

B.

Centralised collection

C.

Direct collection

D.

Payment only through cheques

 
 

Option: A

Explanation :

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34:   In case, cost of capital is 10%, EPS ₹10, IRR 8% and Retention Ratio is 60%, then the value
of equity share as per Gordon's Model will be:
A.

₹100

B.

₹87

C.

₹90

D.

₹77

 
 

Option: D

Explanation :

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35:   A firm with high operating leverage has:
A.

Low fixed cost in its production process

B.

High variable cost in its production process

C.

High fixed cost in its production process

D.

Low variable cost in its production process

 
 

Option: C

Explanation :

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