Operating cash flows of the company

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1.  MARS Securities (Pvt.) Limited has an average net income before tax of Rs.202 Million from three years of its operation where as it has average net income after tax of Rs.121 Million. The company started its business with a net worth of Rs.825 Million. This net worth decreases to 40% after three years. Its average accounting return will be __________________.

2.  BOC Pakistan Limited intends to take a new project and consults Adam Smith Consultancy Firm about the suitability of the project. The firm charges Rs.50, 000 for the service. In evaluation of the proposed investment, such cost will be included in ______________ cost.

3.   Clariant Pakistan Limited wants to introduce a new product along with its existing line of products. It is expected that the new product will bring positive changes in the firm's cash flows together with a decrease in the sales of one of an existing product line. This phenomenon is known as ______________.

4.  Grays of Cambridge (Pakistan) Limited has Sales of Rs.500 Million whereas its cost is Rs.325 Million. The company has an annual depreciation of Rs.50 Million. The tax rate is 37%. Using the above information, the operating cash flows of the company comes out to be _____________.

5.  Reckitt Benckiser Pakistan Limited uses MACRS method of charging depreciation. MACRS means________________________________________.

6. Net Present Value and Internal Rate of Return rules of capital budgeting lead to identical decisions regarding project acceptance or rejection if projects cash flows are  and projects are  .

7.  While calculating IRR, multiple IRR may result in due tocash flows    from a project.

8.  International Industries Limited starts a project that initially costs Rs.500 million. This project will run approximately for 5 years. After 5 years this project has a remaining value of Rs.50 Million. The remaining value of project is known as _________________ and is Rs.Million in this case.

Reference no: EM131170704

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