MCQ On Cash Flow Estimation And Risk Analysis

Reviewed by Editorial Team
The ProProfs editorial team is comprised of experienced subject matter experts. They've collectively created over 10,000 quizzes and lessons, serving over 100 million users. Our team includes in-house content moderators and subject matter experts, as well as a global network of rigorously trained contributors. All adhere to our comprehensive editorial guidelines, ensuring the delivery of high-quality content.
Learn about Our Editorial Process
| By Mehtajimmit
M
Mehtajimmit
Community Contributor
Quizzes Created: 12 | Total Attempts: 30,560
| Attempts: 315
SettingsSettings
Please wait...
  • 1/5 Questions

    Required increase in current assets and increase in current liabilities is subtracted to calculate

    • Change in net working capital
    • Change in current assets
    • Change in current liabilities
    • Change in depreciation
Please wait...
About This Quiz

This MCQ quiz on Cash Flow Estimation and Risk Analysis assesses understanding of key financial concepts including net working capital changes, opportunity costs, and externalities in capital budgeting. It is ideal for learners aiming to enhance their financial decision-making skills.

Capital Budgeting Quizzes & Trivia

Quiz Preview

  • 2. 

    Situation in which company replaces existing assets with new assets is classified as

    • Replacement projects

    • New projects

    • Existing projects

    • Internal projects

    Correct Answer
    A. Replacement projects
    Explanation
    A situation in which a company replaces existing assets with new assets is classified as replacement projects. In this scenario, the company is making a decision to replace outdated or obsolete assets with newer ones that are expected to provide better performance or efficiency. This type of project involves the evaluation of the existing assets, determining their replacement value, and assessing the potential benefits and costs of the new assets. By replacing existing assets, the company aims to improve its operations and maintain or enhance its competitive position in the market.

    Rate this question:

  • 3. 

    Cash flows that could be generated from owned asset by company but not used in project are classified as

    • Occurred cost

    • Mean cost

    • Opportunity costs

    • Weighted cost

    Correct Answer
    A. Opportunity costs
    Explanation
    Opportunity costs refer to the potential benefits or profits that a company foregoes when it chooses to use its owned asset for a particular project instead of using it for an alternative project or opportunity. These costs represent the value of the best alternative that is forgone. In this case, the cash flows that could be generated from the owned asset but are not used in the project represent the opportunity costs, as the company is missing out on the potential benefits that could have been obtained by utilizing the asset differently.

    Rate this question:

  • 4. 

    In capital budgeting, cost of capital is used as discount rate and is based on pre-determines

    • Cost of inflation

    • Cost of debt and equity

    • Cost of opportunity

    • Cost of transaction

    Correct Answer
    A. Cost of debt and equity
    Explanation
    The cost of capital in capital budgeting refers to the rate of return that a company must earn on its investments in order to satisfy its shareholders and lenders. It is calculated by taking into account the cost of debt and equity, which are the two main sources of financing for a company. The cost of debt is the interest rate that the company pays on its borrowed funds, while the cost of equity represents the return that shareholders expect to receive on their investment. By considering both the cost of debt and equity, the company can determine the appropriate discount rate to use when evaluating potential investment projects.

    Rate this question:

  • 5. 

    Economists considers effects of project started on other parts of company or on environment of company is called

    • Externalities

    • Foreign effects

    • Weighted effects

    • Opportunity effects

    Correct Answer
    A. Externalities
    Explanation
    Externalities refer to the effects or consequences of a project that extend beyond the immediate participants or stakeholders. Economists study these effects, which can be positive or negative, to understand the broader impact of a project on other parts of the company or on the environment. Externalities can include pollution, congestion, or positive spillover effects such as knowledge transfer or improved infrastructure. By considering externalities, economists aim to assess the full social and economic costs and benefits of a project, beyond just the direct impacts on the company or individuals involved.

    Rate this question:

Quiz Review Timeline (Updated): Mar 22, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Apr 15, 2016
    Quiz Created by
    Mehtajimmit
Back to Top Back to top
Advertisement
×

Wait!
Here's an interesting quiz for you.

We have other quizzes matching your interest.