Question 1
A project requires an initial outlay of Rs.10,00,000 and is expected to generate uniform annual cash inflows of Rs.2,50,000 for 6 years. At a 10% discount rate (PVIFA 10%, 6 years = 4.355), what is the project's Net Present Value (NPV)?
Correct Answer:
Rs.88,750
Question 2
Under the Internal Rate of Return (IRR) method, a conventional independent project is accepted when:
Correct Answer:
IRR is greater than the cost of capital
Question 3
When NPV and IRR give conflicting rankings for two mutually exclusive projects, which method should be relied upon and why?
Correct Answer:
NPV, because it directly measures the absolute addition to shareholder wealth
Question 4
A non-conventional project has cash flows that change sign more than once over its life. This situation may give rise to:
Correct Answer:
Multiple IRRs
Question 5
The Profitability Index (PI) of a project is 1.25. This indicates that:
Correct Answer:
The present value of inflows is 1.25 times the initial outlay, so the project is acceptable
Question 1
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Prepare with the CMA Final Paper 14 (SFM) Practice Questions - CMA Final Paper 14 Strategic Financial Management Exam practice quiz. This question bank includes 100 questions covering project, capital, portfolio, expected, and return. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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CMA Final Paper 14 (SFM) Practice Questions - CMA Final Paper 14 Strategic Financial Management Exam

This practice set contains 100 questions from the matching question bank and focuses on project, capital, portfolio, expected, and return. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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