In capital budgeting, the term capital rationing implies:
A. | that no retained earnings are available. |
B. | that limited funds are available for investment. |
C. | that no external funds can be raised. |
D. | that no fresh investment is required in current year. |
Option: B Explanation : Click on Discuss to view users comments. |
In certainty equivalent approach, adjusted cash flows are discounted at:
A. | Accounting Rate of Return |
B. | Internal Rate of Return |
C. | Hurdle Rate |
D. | Risk Free Rate |
Option: D Explanation : Click on Discuss to view users comments. |
Combined leverage is calculated as:
A. | Operating Leverage + Financial Leverage |
B. | Operating Leverage - Financial Leverage |
C. | Operating Leverage x Financial Leverage |
D. | Operating Leverage / Financial Leverage |
Option: C Explanation : Click on Discuss to view users comments. |
Which of the following is not true with reference to capital budgeting?
A. | Capital budgeting is related to asset replacement decisions. |
B. | Cost of capital is equal to minimum required return. |
C. | Existing investment in a project is not treated as sunk cost. |
D. | Timing of cash flows is relevant. |
Option: C Explanation : Click on Discuss to view users comments. |