An initial cost is $6000 and the probability index is 5.6 then the present value of cash flows will be __________?
Correct answer: C. 33600
- A. 25000
- B. 28000
- C. 33600
- D. 30000
Explanation
The present value of cash flows equals the initial cost multiplied by the profitability index: 6000 × 5.6 = 33,600. Therefore, option c gives the required amount.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
In large expansion programs, the increased riskiness and the floatation cost associated with project can cause ___________?
The cash inflows are the revenues of project and are represented by ___________?
The project whose cash flows are less than the capital invested for required rate of return then the net present value will be ___________?
An increase in marginal cost of capital and the capital rationing are two arising complications of __________?
In capital budgeting, a technique which is based upon discounted cash flow is classified as ___________?
In estimating value of cash flows, the compounded future value is classified as its _________?