Questionnaire on Cash Flow and Economic Indicators for IMD

Answers 1)b. 2)a. 3)d. 4) b. 5) b. 6) a. 7) c. 8) c. 9) d. 10) c.

1) Which of the following is not an economic indicator?
A) Net Present value
B) Economic Rent
C) Internal Rate of Return
D) Payback Period

2) Sum of the present values of the annual net cash flow is

the
a) NPV (Net Present Value)
b) NCF (Net Cash Flow)
c) Net Capital Expenditure
d) a) and c) both
3) In the Present Value Formula
PV= FVn / (1+r)n
(1+r)n is known as
A) Discount Rate
B) No. of years
C) Future value of a payment
D) Discount Factor
4) The NPV ---------------- when discount rate increases
A) Increases
B) Decreases
C) Remains same
D) Is unaffected

5)

When NPV @ 12% discounting is US$ 100 MM,

it means project earns
A) <12% rate of return
B) US $ 100 MM$ + 12%
C) US $ 100 MM$ - 12%
D) US $ 100 MM

6)

If the project start is delayed

a) NPV will decrease
b) NPV will increase
c) NPV will not be affected
d) None of the above

7)

IRR is
a) The discount rate for which all discounted negative
cash flows are more than all discounted positive cash
flows
b) The discount rate for which all discounted negative
cash flows are less than all discounted positive cash
flows
c) The discount rate at which the NPV becomes zero
d) None of the above

8)

A discounted cash flow is

a) A cash flow adjusted for the time value of money
b) A form of present value analysis

c) Both a) and b)
d) None of the above
9) Takes time into account
a) IRR
b) NPV
c) Pay Out Period
d) All of above

10) A typical net cash flow looks like following, the

2nd phase of negative cash flow at the end of
project life is due to
a) Capital Expenditure
b) Operating Expenditure
c) Abandonment cost
d) All of the above

+ve

Net Cash
Flow
Time
-ve