1 While generating Input based ideas for a new project, which of the following

information is relevant?

Family budget studies

Market studies
Import and Export Statistics
None of these

2 Good ideas are generated using various methods such as:

Cost reduction
Productivity improvement
Improvement in contribution margin
All of these

3 While screening from the various ideas collected, you must consider the following
criteria:

reasonability of the cost

availability of the raw materials
risk level acceptability
All of these

4 You can get good ideas for projects by doing the following:

Attending trade and business fairs

Reviewing Import and Export data
Study new technological developments
All of these

5 Which of the following is / are the main features of Revenue Expenditure

It precedes benefit / utility

It is incurred and benefits are available on recurring basis
It is to use and maintain the assets so created
All of these

6 Which of the following is / are the main features of Capital Expenditure

It is subject to completion report of the scheme or asset

It requires administrative approval from Competent Authority
It precedes benefit / utility
All of these

7 Which of the following are the sources of Secondary Information?

Census of India
Plan Reports
Economic Survey
All of these

8 If a company uses 60% debt @ rate of 12%, 20% preference @ rate of 10% and
balance equity @ 20%, what will it’s Weighted Average Cost of Capital will
be ?

0.14
0.15
0.132
None of these

9 Harmish set-ups a new Solar Cells manufacturing unit. His company uses 65% debt
@ rate of 12.50%, 25% equity @ 23.00%, at what is the maximum rate that is can
issue preference shares so that its Weighted Average Cost of Capital does not exceed
15.00%:

0.125
0.15
0.1558
0.1125
10 A company intends to invest Rs. 20 crores in a project which earns a rate of return
of 20%. Its Weighted Average Cost of Capital of a firm is 13.00%. What is Net return
from the project?

Rs. 1.30 crores

Rs. 2.60 crores
Rs. 2.40 crores
None of these

11 Which key characteristic indicates that every project has a finite start and a finite
end?

Temporary
Qnique deliverables
Prrogressive Elaboration
All of these

12 When any project aims to produce some product, service, or some another result
and addressess a problem or need of analyzing before project start is termed as -----------------------

Temporary
Qnique deliverables
Prrogressive Elaboration
Development

13 The key characteristic -------------means that the successive iterations of planning

processes result in developing more effective solutions to progress and develop projects.

Temporary
Qnique deliverables
Prrogressive Elaboration
projections
14 the listed characteristics, a conventional project is --------------------------

Purposeful as it has a rational and measurable purchase

Logical as it has a certain life-cycle
Structured as it has interdependencies between its tasks and activities
All of these

15 Funding (financing) of long-term infrastructure, industrial projects, and public

services using a non-recourse or limited recourse financial structure is called
as ----------------------

Project Finance
Industry Finance
Infrastructure Finance
long term finance

1 Project Appraisal requires carrying out appraisals under which of the

following heads ?

Technical
Economic
Financial
All of these

2 Which of the following is not a part of examination as part of Project Appraisal ?

Financial
Technical
Commissioning
None of these
3 Why is Project Appraisal important ?

It gets the systems right

It lays the foundation for delivery
It justifies the money to be spent on the project
All of these

4 How does Project Appraisal help managers ?

It makes sure their program benefits organisation

It provides documentation to meet financial and audit requirements
It is consistent and objective in choosing projects
All of these

5 Fill in the blank. ______________ Appraisal looks into the financial feasibility of
the new capital investment proposal or expansion of existing productive facilities.

Financial
Market
Economic
Technical

6 The Project Team has worked on ideas and inputs from the production team,
collected the data, and documented all the data. The project appears viable to the
Project Team. What will the Project Team do next?

Finalise the contracts with various vendors

Hand over the completed project to the operations
Capitalise the project in the books
Get the project appraised independently preferably from bankers/financers
7 State whether True or False. Project Appraisal helps Project Managers to make
sure that the project benefits the organisation

True
False

8 Why is Appraisal an important decision making tool ?

It ensures that the projects selected for funding are sustainable

It presents the project in a very rosy manner to the financers
It ensures that the company is in a position to borrow money
It enables managers to generate theoretical knowledge to present to the financers

9 How does a good Appraisal Report help the organisation to get the systems right ?

It ascertains that the project in beneficial to the nation and the society
It justifies spending money on a project
It ensures that the project application, appraisal and approval functions are separate
None of these

10 Project Appraisal is process of assessing the --------------------- types of the

Appraisal Aspects.

Organizational Aspects and Technical Aspects

Managerial Aspects & Economic Aspects
Financial Aspects and Marketing and Commercial Aspects
All of these

11 The Key aspects of appraisal will be evaluated --------------- commencement of

Project.

during
before
after
simultaniously
12 The aspects which help you to see if project is adequately staffed with the
structure of the Organization and helps to check Resource, Recruitment, and
Training aspects is covered under----------------------------

organisational aspects
Managerial aspects
Commercial aspects
Financial aspects

13 The aspects help you to assess competency and business knowledge of the
promoter’s aspects is called as ----------------------------

organisational aspects
Managerial aspects
Commercial aspects
Financial aspects

14 Financial appraisal will also help the organizations to check ----------------

feasibility to spend less

feasibility to gain more profits
feasibility of alternatives to spend less and gain more profits
feasibility to sustain the project

15 The cost, pricing , Financing ans investment v.s profit are the key aspects
of ---------------------

Economic analysis
Finacial Analysis
Infrastrure analysis
Market appraisal
1 While choosing a particular technology, what would an industrialist consider ?
Ease of absorption
Latest developments
Use by other units
All of these

2 Which of the following does not form part of Structures and Civil Works
composition?
outdoor works
site preparation and developments
buildings and structures
processed industrial materials and components

3 Which of the following are types of project charts and layouts?

General functional layout
Material flow diagram
Utility layout
All of these

4 Fill in the blank. ___________ refers to the number of units or volume that can be
produced during a given period.
Product Mix
Material Inputs
Plant Capacity
Technical Arrangements

5 A unit could bankrupt due to which of the following reasons?

Higher salaries for the factory workers
Very costly land & building
Undependable supply of basic inputs
All of these

6 On which of the following aspects is a Technical Appraisal based upon:

Environmental
Plant Capacity
Product Mix
All of these
7 Fill in the blank. __________________ are some of the scheduling techniques used in
the review of the Project
Gantt Charts, PERT, CPM, GERT
Cost over-runs
Time over-runs
All of these

8 State whether True or False. General functional layouts establish the progress of
production from one machine to another with description, location, space required,
need for power and utilities and distance from next section.
True
False

9 Why is there a need nowadays for mass customization?

Better profitability of the units
It increases the productivity of the unit
Customer demands are at an all time high
All of these

10 ___________ refers to the number of units or volume that can be produced

during a given period.
Product Mix
Material Inputs
Plant Capacity
Technical Arrangements

11 How is Technical appraisal important?

It looks into the other benefits to the nation as a whole
It ensures that there is a potential market which can be met by the production capacity of
the unit.
It facilitates the optimal project formulations in terms of capacity, technology, location,
technology, size, etc on.
All of these
12 The Full form of ETP is:
Enterprise Technology Plan
Enterprise Technology Plant
Effluent Taken for Purification
Effluent Treatment Plant

13 State whether True or False. It is better is Manufacturing Lead Time is as close

as possible to actual machining and assembly time
True
False

14 Which of the following is not one of the methods to assess the Competitive status of
a unit?
Performability
Quality
Cost of Production
Throughput

15 What is meant by WIP?

The ability of the system to respond effectively to change
The hourly/daily production rate which is the reciprocal of production time per unit
The total time to process the product through the manufacturing plant
The quantity of semi finished product currently lying on the factory floor Throughput

16 State whether True or False. A higher Work-in-Progress preferred for an efficient

manufacturing viz-a-viz, lower Work-in-Progress.
True
False

17 What is meant by Throughput ?

The quantity of semi finished product currently lying on the factory floor Throughput
The ability of the system to respond effectively to change
The hourly/daily production rate which is the reciprocal of production time per unit
The total time to process the product through the manufacturing plant
18 How will a cargo airline measure its capacity ?
Seat miles
Tonnes carried
Miles travelled
Number of Persons carried

19 How will a passenger airline measure its capacity ?

Seat miles
Tonnes carried
Miles travelled
Persons carried

20 How will a hospital measure its capacity?

Number of rooms
Number of faculties
Number of hospital beds
Weight bearing capacity of the building

21 How will a hotel measure its capacity?

Number of rooms
Number of recreational facilities
Number of beds
All of these

22 State whether True or False Total Quality Control (TQC) involves control of
quality at source
True
False

23 State whether True or False Maintenance of high quality depends on the integrity
of the materials and integrity of manufacturing process.
True
False
24 What is the advantage in using an ES and ERP in a manufacturing company ?
They measure the performance of a manufacturing line w.r.t. down time
They measure the flexibility of the system to respond effectively to change
They help produce better quality products
The apply lean production thinking to the whole company

25 State whether True or False. An ERP is a computer program that performs a task
normally done by an expert and which in doing so, uses captured, heuristic
knowledge
True
False

26 What is the advantage in using an ERP in a manufacturing company ?

It helps the system to become flexible to change
It integrates the financial data with pay rolls, manufacturing and inventory records and
purchasing
It improves the MLT of the manufacturing unit
All of these

27 A method of inspection to ensure that a project is potentially designed, engineered

and followed the accepted standards is called as-----------------
Technical appraisal
Financial appraisal
Economic appraisal
Marketing appraisal

28 The step which Focuses not on the people who do the work, but the tasks they
perform, Standardize policies and procedures in the company to maximize efficiency
is covered under process step of --------------
Analysing process
Align business processes with other companies in the sector
Develop performance measures
Build quality tests in processes
29 The process step ----------------------Find out how other competing companies
organize and perform certain jobs to possibly integrate this and therefore lead to
improvement.
Analysing process
Align business processes with other companies in the sector
Develop performance measures
Build quality tests in processes

30 The Benchmark current processes to identify problems, predict future outcomes

and measure productivity gains through key performance indicators for the industry
is assesed in the process step of ---------------------
Analysing process
Align business processes with other companies in the sector
Develop performance measures
Build quality tests in processes

1 State True or False. A blood donation camp or nutrition program for girls is very
much relevant under SCBA methology.

True
False

2 State whether True or False. The primary purpose of any financial institution is to
make profit.

True
False

3 Which of the following are the principal sources of discrepancy between the
monetary and social benefits of the project?

Merit wants
Taxes and subsidies
Concern for savings
All of these
4 Various financial institutions in India carry out Economic Appraisals considering
which of the following three aspects?

Economic Rate of Return, Effective Rate of Production, Product Resource Cost

Economic Rate of Return, Effective Rate of Production, Domestic Resource Cost
Effective Rate of Return, Economic Rate of Production, Domestic Resource Cost
Effective Rate of Return, Economic Rate of Production, External Resource Cost

5 Which of the following is/are the common market imperfections found in

developing countries?

rationing
prescription of minimum wage rate
foreign exchange regulation
All of these

6 State whether True False. Consumers in a developing economy pay more for a
commodity under rationing

True
False

7 State whether True False. Practically, Economic Appraisal done by financial

institutions is not very meticulous and precise.

True
False

8 State whether True False. When imperfections exist, market prices do not reflect
social values.

True
False
9 A type of decision method applied to a project, programme or policy that takes into
account a wide range of costs and benefits, denominated in monetary terms or for
which a monetary equivalent can be estimated is called as --------------------------

Financial Appraisal
Economic appraisal
performane appraisal
Cost appraisal

10 Economic appraisal is also a systematic process for examining --------------------

focusing on assessment of needs, objectives, options, costs, benefits, risks, funding,
affordability and other factors relevant to decisions.

Use of raw material for project

Usage of manpower deployed
alternative uses of resources,
cost and benefit analysis

11 The main types of economic appraisal consists of ----------------------

Cost -benefit analysis

Cost effectiveness analysis
Scring and waighting
All of these

12 Economic appraisal is a methodology designed to ---------------- that offer the best

value for money (VFM).

assist in defining problems

assist in defining problems and finding solutions
assist in defining problems and finding solutions
assist in giving insight to management
13 Good economic appraisal leads to better decisions and VFM. It facilitates --------

good project management

good project management and project evaluation
good project evaluation
Deciding project efficiency and profitability

14 An important aspect of the relationship between appraisal and decision is that ------------------

the scope of the appraisal though not clear, must include whose viewpoint is to be taken
it forms lingae between management and appraiser
the scope of the appraisal should be a clear, include whose viewpoint is to be taken
the scope of the appraisal should include and decides whose viewpoint is to be taken

15 A generic term for economic appraisal, starting with an inventory of all the costs
and benefits of each alternative, whatever they are and whoever incurs them is called
as ---------------

Cost benefit Analysis

Financial Analysis
structural analysis
General economic analysis analysis

16 The main decision rule for CBA is that an activity should be undertaken if the
sum of the benefits that result is greater than the sum of the costs of undertaking it
or, identically, if its ---------------------

net benefit is neutral

net benefit is positive
net benefit isNegative
net benefit is equql to cost incurred
17 The techniques in the most common forms used for economic appraisal consists
of ----------------

Cost minimisation analysis and Cost effectiveness analysis as well as Cost benefit and
Cost utility analysis
Cost benefit analysis
Cost utility analysis
Cost effectiveness analysis

18 There is a ------------------ which differs from the others in that the range of costs
and consequences are reported without attempting to aggregate the costs or the
health benefits into a single measure.

Benefit analysis
cost analysis
project analysis
cost-consequences analysis (cost analysis)

1 Which Method of Demand Forecasting should a steel producer use to forecast

demand for his products?

Market Analysis
End-Use
Trend
Regression

2 Identify from the following statements, one statement which is not concerning to
Market analysis

Production possibilities and constraints

Consumer behaviour, intentions, motivations, attitudes, preferences and requirements
Extent of competition and market share
Suitability of production process
3 Why is Market appraisal important?

It can sell the products at the price points such that it can service the interest on loans taken.
Even after servicing the loan, there is sufficient surplus for the unit to carry out sustainable
operations.
It ensures that the project generates foreign exchange savings
It ensures that the project generates employment
All of these

4 The End Use Method is appropriate for predicting demand of products such as:

Pins
Packaged food items
White Goods
Caustic Soda

5 What is the purpose of Competitive Analysis ?

determine the strengths and weaknesses of competitors

find out where we are going wrong/right
find out our own strengths and weaknesses
judge our competitors in correct manner

6 Fill in with appropriate words. Choice of selecting an appropriate distribution

strategy is based on factors such as _______________ and internal resources.

End-use Method
Regression Method
Pricing Method
Trend Method
7 Fill in the blank. ___________________ deals with the study of the segmented
market, product positioning, product promotion and distribution strategies and
analysis of the competition.

Demand Forecasting
Trend Method
Regression Method
Market Analysis

8 The review which is carried out to ascertain that the products manufactured by the
project can be sold and its value realized is called as--------------------------

Profitability appraisal
Economic appraisal
Financial appraisal
Market appraisal

9 Market appraisals are carried out --------------- putting a property on the market to
give the vendor an idea of what is possible in terms of selling price.

Simultaniously
During the process of
before
After

10 In the market appraisal the first thing that should be taken into consideration is
that ---------------- so that the products that are manufactured can be sold out

whether there are fundamental sales forces as well as the distribution network in the unit
itself
whether there are fundamental sales forces in the unit itself
whether there is distribution network in the unit itself
whether there is sufficient product team in the unit itself
11 The market appraisal makes sure of the fact that that the project which is in focus
has a sales force which is competent enough. Also, it helps in analyzing
the --------------- so that the products that are being manufactured could be sold
effectively.

distribution network
production network
production capability
market demand

12 The other important factor of understanding market appraisal is that ----------------------------------, w

the loans that have been taken.

checks whether after the loans have been settled down, do still have enough money after the loan has been se
effectively.
ensure a potential market that can be met by the unit’s total capacity of the production
it provides with a particular strategy which is well thought of so that the sales and the marketing can be carri
All of these

1 Why is Financial Appraisal important ?

It ensures that the project is able to get a reasonable return on the investment made to carry on sustainable o
It determines the Break-Even Point to find the exact level of sales and production when the unit can Break-
It estimates the cashflows and reasonable level of profit that the unit can make from the operations
All of these

2 Which of the following is an advantage of using the IRR technique of discounted

cashflow?

It is fairly complicated to calculate

it is not a measure of absolute profitability
It means a firm selecting projects where the IRR exceeds the cost of capital should
increase shareholders' wealth.
Interpolation only provides an estimate and an accurate estimate requires the use of a spreadsheet programm
3 State whether True False. When a Project is being formulated, after the
documentation of data and project Appraisal, the project which has best financial
viability will be selected for implementation.

True
False

4 Which of the following does not form part of the Sources of Funds under Financial
Appraisal?

Equity Share Capital

Term Loans
Debenture Capital 4
Cash in Bank

5 Find the Net Rate of Return on a new Fertilizer plant; Total Investment is
Rs. 7.50 crores; Project earns net profit after depreciation, interest of Rs. 2 crores;
Interest Cost of Rs. 0.60 crores. Depreciation is Rs. 0.50 crores

0.2667
0.12
0.1867
None of these

6 Aparna is considering setting up a teaching academy with an investment outlay of

Rs. 50 lakhs. If the average annual Net Profit after taxes of the company is
Rs. 7 lakhs, what is the payback period of the project?

Rs. 7.00 years

Rs. 3.50 years
Rs. 7.14 years
None of these
7 Which of the following is not an advantage of using the IRR technique of
discounted cashflow?

It is not a measure of absolute profitability

it considers the time value of money
It is based on cash flows not profits
None of these

8 MyMusic Stores Ltd has Earnings per Share of Rs. 0.50 and its share Market Price
is Rs. 20.00. What is the P/E Ratio of the Company?

20.5
0.025
10
40

9 Predict Projects Pvt Ltd has Current Assets of Rs. 3,53,15,500/- and Current
Liabilities of Rs. 2,39,50,400/- and Inventories of Rs. 35,50,000. What is Current
Ratio of the company?

1.33
1.47
1.62
None of these
10 What is the Profitability Index of Project A ?

1.3
1.08
1
0.91

11 What is the Profitability Index of Project B ?

0.86
1
1.06
1.23

12 What is IRR of Project A ?

0.1524
0.1424
0.1624
0.145

13 State whether True False. Miscellaneous expenditure is written on the asset side of
the Balance sheet.

True
False

14 State whether True or False. A high debt equity ratio may indicate that the
financial stake of the creditors is more than that of the owners.

True
False
15 Which are the sources of cash for an organisation?

Savings Bank account, Current Bank account

Tax not paid to Government
Cash from operations, Sale of machinery, Issue of new shares
All of these

16 Which document is required to be analysed with a view to ascertain, whether the

concern is under/overcapitalized, whether the borrowings raised are not out of
proportion to its paid-up capital and reserves, how the current liabilities stand in
relation to

Cash flow Statement

Balance sheet & P/L account
Only Balance sheet
Only P/L a/c statement

17 One aspect of Financial Appraisal is the --------------------------to implement the

project and sources of the same

Assessment of funds required

Assessment revenue generation
Assessment of capital expenditure
Assessment of profitability and losses

18 Which ratio helps in making a quick assessment of profitability, particularly

projects with short life?

Internal rate of return

Productivity ratio
Simple rate of Return
Interest coverage ratio
1 Which of the following is not a valid reason for a firm to avoid creating a capital
structure consisting of 100% debt?
The payments that a firm must make to service such a high debt level severely restricts the
flexibility of managers to make new investments
Firms may want to maintain an ‘investment grade’ level on all their debts to avoid any adverse reaction from
As a firm takes on more debt, there is an increased risk that it will not be able to pay all of its interest in a d
The debt shield is only applicable up to the level of 50% debt

2 Why did MM present their propositions in a simplified framework that did not
reflect financial conditions found in the real world?
MM argued that increases in equity return balanced any impact from taxes that their propositions failed to a
As professors, MM were wary of confusing their students with rigorous mathematical proofs
MM did not understand the tax implications of interest payments
MM wished to clarify the framework in which they presented their findings on capital
structure

3 According to MM, what happens to the residual equity when a firm increases the
amount if debt it holds?
The value of the equity decreases because the residual equity has become less risky
The resulting increase in the firm’s WACC decreases the risk of equity
The remaining equity becomes riskier because it must support a larger portion of debt
MM argue that changing the level of debt does not affect any other element of a firm’s capital structure, inc

4 State whether the following formula True or False. Capital gearing ratio =
Shareholders' funds____________ Debentures + Preference share capital
True
False

5 What does the Pecking Order Theory state?

Pecking Order is the informal greeting to invite business visitors in the company
Companies prioritize their sources of financing according to the law of the least
effort
There is a correct order to peck a company’s finance portfolio
All of these
6 What is meant by Free Cashflow in relevance to Agency Costs?
Unless free cash flow is given back to investors, management has an incentive to destroy
company value through empire building and perks etc. Increasing leverage imposes
financial discipline on management.
If debt is risky (e.g., in a growth company), the gain from the project will accrue to debt holders rather than
potential to increase company value
As Debt-Equity Ratio increases, management can undertake risky (even negative NPV) projects as if the pa
downside.
All of these

7 Which of the following is a reason that companies cannot hold 100% debt?
Positive views
No compulsion as such
Possible Bankruptcy
All of these

8 What is meant by Asset substitution cost in relevance to Agency Costs?

Unless free cash flow is given back to investors, management has an incentive to destroy company value th
If debt is risky (e.g., in a growth company), the gain from the project will accrue to debt holders rather than
potential to increase company value
As Debt-Equity Ratio increases, management can undertake risky (even negative NPV) projects as if the pa
downside.
All of these

9 Which of the Following is not a reason that companies cannot hold 100% debt ?
Negative Action
Additional Costs
Possible Bankruptcy
None of these

10 State whether True False. Project financing structure refers to the way a company
finances its assets through some combination of equity, debt, or hybrid
securities
True
False
11 Out of the following list, which one of the following statements, if true, would
violate the theoretical assumptions of MM proposition I
A Capital market investment firm has devised a computer model that allows its members to accurately pred
In a historic agreement, all branches of the Central and State governments agree to abolish the practise of ta
The United Nations outlaws all tariffs and forbids countries from protecting weak industries within their bo
Corporations decide to base their managers’ pay solely on the degree to which those managers’ actions raise

12 Who among the following has proposed the Modigliani Miller Theorem
Francisca Miller
Jennifer Miller
Franco Modigliani
Freddy Modigliani

13 The capital structure is the particular combination of ----------- used by a company

to finance its overall operations and growth.
debt and equity
assets and liabilities
income expenditure
receivables and payables

14 Equity capital arises from ----------in a company and claims to its future cash flows
and profits
Loan Availed
ownership shares
ownership of debentures
promotors investment

15 Equity capital arises from ownership shares in a company and claims to its future
cash flows and profits. Debt comes in the form of bond issues or loans, while equity
may come in the form of -----------------------
common stock
common stock, preferred stock, or retained earnings
retained earnings
common stock, preferred stock, or retained earnings
16 If debt asset ratio is -----------------would make investors feel better about the
company’s ability to meet responsibilities even in adverse situations.
Lower
Higher
acceptable
Neutral

17 If the operating leverage is ----------, there are more chances of a business failure,
and the company could even go to the extent of bankruptcy.
low
high
balanced
medium

18 The capital structure of a business also depends on whether the management is

conservative or aggressive. A management that is more aggressive----------- and
therefore, more debt will definitely not be an issue
would not be afraid of taking a risk
would be afraid of taking a risk,
will not raise the debt
will raise the debt