A. Gives a correct picture of profitability
B. Underemphasises liquidity
C. Does not measure the discounted rate of return
D. Takes into account the cash inflows after the recovery of investments
Related Mcqs:
- Payback period____________________?
A. And economic life of a project are the same
B. Is the length of time over which the earnings on a project equals the investment
C. Is affected by the variation in earnings after the recovery of the investment
D. All A, B. and C - An investment of Rs. 100 lakhs is to be made for construction of a plant, which will take two years to start production. The annual profit from the operation of the plant is Rs. 20 lakhs. What will be the payback time ?
A. 5 years
B. 7 years
C. 12 years
D. 10 years - The total investment in a project is Rs. 10 lakhs and the annual profit is 1.5 lakhs. If the project life is 10 years, then the simple rate of return on investment is__________________?
A. 15%
B. 10%
C. 1.5%
D. 150% - If the interest rate of 10% per period is compounded half yearly, the actual annual return on the principal will be ______________ percent ?
A. 10
B. 20
C. > 20
D. < 20 - With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project ?
A. Decreases
B. Increases
C. Increases linearly
D. Remain constant - In declining balance method of depreciation calculation, the _____________________?
A. Value of the asset decreases linearly with time
B. Annual cost of depreciation is same every year
C. Annual depreciation is the fixed percentage of the property value at the beginning of the
particular year
D. None of these - Annual depreciation cost are not constant when, the _____________ method of depreciation calculation is used ?
A. Straight line
B. Sinking fund
C. Present worth
D. Declining balance - _____________ method for profitability evaluation of a project does not account for investment cost due to land ?
A. Net present worth
B. Pay out period
C. Discounted cash flow
D. Rate of return on investment - The depreciation during the year ‘n’, in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage ‘N’ to the ?
A. Initial cost
B. Book value at the end of (n – 1)th year
C. Depreciation during the (n – 1)th year
D. Difference between initial cost and salvage value - ‘P’ is the investment made on an equipment, ‘S’ is its salvage value and ‘n is the life of the equipment in years. The depreciation for Rath year by the sum-of year‟s digit method will be____________________?
A. (P – S)/n
B. 1 – (P/S)1/m
C. (m/n) (P – S)
D. [2 (n – m + 1)/n(n + 1)]. (P – S)
