ACC501 Final Term Quiz 2 July 2023 by Miss Mehwish

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Q1. Which of the following is the credit rating agency in Pakistan?

1. Moody's
2. All of the given options
3. PACRA
4. Standard and Poor's

Correct option: C) PACRA

Q2. A project has an initial investment of Rs. 600,000. What would be the NPV for the project if it has a profitability index of 1.12?

1. Rs. 65,000
2. Rs. 72,000
3. Rs. 55,000
4. Rs. 40,000

Correct option: B) Rs. 72,000

3. The projected cash flows from a project are:

Year 1: Rs. 100 Year 2: Rs. 300 Year 3: Rs. 400 Year 4: Rs. 800 The project cost is Rs. 800. What would be the payback period for the project? Options: A) 3.67 Years B) 3.00 Years C) 2.00 Years D) 2.67 Years

Correct option: D) 2.67 Years

Q4. Which of the following entity manages the sinking fund?

1. Bond trustee
2. Chief Executive Officer
3. Board of Governors
4. Board of Directors

Correct option: A) Bond trustee

Q5. ABC Corporation has two shareholders; Mr. Aamir with 50 shares and Mr. Imran with 70 shares. Both want to be elected as one of the four directors, but Mr. Imran doesn't want Mr. Aamir to be a director. How many votes would Mr. Aamir be able to cast as per cumulative voting procedure?

1. 120
2. 280
3. 70
4. 200

Correct option: A) 120

Q6. Which one of the following formulas can be used to calculate Operating Cash Flow (OCF) under the tax shield approach?

1. OCF = (sales – cost) x (1 – tax rate) + (depreciation x tax rate)
2. OCF = (sales – cost) x (1 + tax rate) + (depreciation x tax rate)
3. OCF = (sales – cost) x (1 – tax rate) – (depreciation x tax rate)
4. OCF = (sales + cost) x (1 – tax rate) + (depreciation x tax rate)

Correct option: A) OCF = (sales – cost) x (1 – tax rate) + (depreciation x tax rate)

7. ABC Company has the following information regarding its proposed investment: Initial Investment: Rs. 250,000

Net Present Value: Rs. 40,000 Cost of Capital: 12% What will be the Profitability Index (PI) of the proposed investment? A) 4% B) 1.16 times C) 0.16 times D) None of the given options