Posted by **zeeshan** on Wednesday, August 4, 2010 at 12:58pm.

Question No 1:

Sumi Inc. has policy of paying a Rs. 9 per share dividend every year. If this policy is to continue indefinitely, what will be the value of a share of stock at a 12% required rate of return?

Rs. 30

Rs. 45

Rs. 60

Rs. 75

Question No: 2

The XYZ Corporation is considering an investment that will cost Rs. 80,000 and have a useful life of 4 years. During the first 2 years, the net incremental after-tax cash flows are Rs. 25,000 per year and for the last two years they are Rs. 20,000 per year. What is the payback period for this investment ?

3.2 Years

3.5 Years

4.0 Years

Cannot be determined from the given information

Question No: 3

Which of the following statement is INCORRECT regarding a normal project ?

a)If the IRR of a project is greater than the discount rate, k, then its PI will be greater than 1

b)If the NPV of a project is greater than 0, then its PI will exceed 1

c)If the IRR of a project is 8%, its NPV, using a discount rate, k, greater than 8%, will be less than 0

d)If the PI of a project equals 0, then the project's initial cash outflow equals the PV of its cash flows

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