UGC NET Management Previous Year Solved Papers - July 2016
16. Match the items of List–I with the items of List–II :
| List–I | List–II |
| (a) Net present value | 1. Number of years required to recover the original cash outlay invested in a project. |
| (b) Payback period | 2. It is the rate of return that equates the present value of anticipated net cash flows with the initial outlay. |
| (c) Internal rate of return | 3. It is found out by dividing the average after-tax profit by the average investment. |
| (d) Accounting rate of return | 4. It is the difference between the present value of cash inflows and present value of cash outflows. |
- Option : B
- Explanation : Calculation of Annual Installment
10,000 = A × PVFA3,009
10,000 = A × 2.531
By paying ` 3,951 each year for three years, you shall completely pay-off your loan with 9 percent interest. This can be observed from the loan-amortization schedule given under:
18. Match the items of List–I with the items of List–II :
| List–I | List-II |
| (a) M.M. Hypothesis without taxes | 1. The cost of debt and the cost of equity is assumed to be independent to the capital structure. |
| (b) Net operating income approach | 2. In the absence of taxes, a firm’s market value and the cost of capital remain invariant to the capital structure changes. |
| (c) M.M. Hypothesis under corporate taxes | 3. The cost of equity is assumed to increase linearly with leverage. |
| (d) Net income approach | 4. The value of the firm will increase with debt due to the deductibility of interest charges for tax computations and the value of the levered firm will be higher than the unlevered firm. |
- Option : B
- Explanation : An act of acquiring effective control by one company over the assets or management of another company without any combination of companies, is referred to as ‘acquisition’. A typical characteristic of acquisition is that while two or more companies remain
