Entrepreneurship Development MCQ || Entrepreneurship Development Questions and Answers Part 1

106. The profitability index shows benefits from the proposal in

  1. absolute terms
  2. relative terms
  3. both of the above
  4. none of these

Answer.2. relative terms

Explanation:

The profitability index (PI) is a measure of a project’s or investment’s attractiveness. The PI is calculated by dividing the present value of future expected cash flows by the initial investment amount in the project.

Although the profitability index is an extension of the present value method, many writers prefer the present value to the profitability index because it expresses, in absolute terms, the expected economic contribution of the project. In contrast, the profitability index expresses only the relative profitability.

 

107.  For discounted cash flow methods, the discount rate used is:

  1. fixed arbitrarily
  2. equivalent to bank rate
  3. equivalent to firm’s average cost of capital
  4. equivalent to final rate of dividend

Answer.3. equivalent to firm’s average cost of capital

Explanation:

Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its expected future cash flows. DCF analysis attempts to figure out the value of an investment today, based on projections of how much money it will generate in the future.

The enterprise valuation approach discounts the after-tax free cash flow available to the firm from operations at the weighted average cost of capital to obtain the estimated enterprise value.

 

108. The process of measuring the progress and performance of a project is called

  1. project appraisal
  2. project evaluation
  3. project control
  4. project audit

Answer.1. project evaluation

Explanation:

The process of measuring the progress and performance of a project is called project evaluation.

Project evaluation is a systematic and objective assessment of an ongoing or completed project. The aim is to determine the relevance and level of achievement of project objectives, development effectiveness, efficiency, impact, and sustainability.

 

109. The excess of the present value over the cost of the project is _______

  1. ARR
  2. IRR
  3. NTV
  4. pi

Answer.3. NTV

Explanation:

The excess present value index sometimes also called the profitability index is (or further step in the refinement of the excess/net present value approach. It reflects the percentage relationship between the present value of the future cash inflows at the desired rate of return and the initial investment. The excess of the present value over the cost of the project is NTV (net terminal Value).

The terminal value is calculated by dividing the last cash flow forecast by the difference between the discount rate and terminal growth rate. The terminal value calculation estimates the value of the company after the forecast period.

 

110. In case of mutually exclusive projects, the project with _____ PI is to be selected

  1. higher
  2. lower
  3. negative
  4. positive

Answer.1. higher

Explanation:

In the case of mutually exclusive projects, the project with the highest net present value or the highest IRR or the lowest payback period is preferred and a decision to invest in that winning project excluded all other projects from consideration even if they individually have positive NPV or higher IRR than hurdle rate or shorter payback period than the reference period.

 

111.  In independent projects, accept a project if its NPV is ______

  1. higher
  2. lower
  3. negative
  4. positive

Answer.4. positive

Explanation:

Independent project:- A project whose acceptance or rejection is independent of the acceptance or rejection of other projects. If NPV is greater (positive) than zero (NPV >0),  accept the project. Mutually exclusive projects.

If the NPV of one project is greater than the NPV of the other project, accept the project with the higher NPV. If both projects have a negative NPV, reject both projects.

 

112. Under Net Terminal Value Method, accept a project if its NTV is _______

  1. higher
  2. lower
  3. negative
  4. positive

Answer.4. positive

Explanation:

A variation of the terminal value method (TV) is the net terminal value (NTV). If the NTVis positive, accept the project, if the NTV is negative, reject the project. In the above example, the NTV is positive. Therefore, the project is acceptable.

 

113.  Accept a project if its IRR is ____ when compared to the desired minimum.

  1. higher
  2. lower
  3. negative
  4. positive

Answer.1. higher

Explanation:

If the IRR of a project is greater than or equal to the project’s cost of capital, accept the project. However, if the IRR is less than the project’s cost of capital, reject the project.

 

114. Reject a project if its IRR is ______when compared to the desired minimum.

  1. higher
  2. lower
  3. negative
  4. positive

Answer.2. lower

Explanation:

If the IRR of a project is greater than or equal to the project’s cost of capital, accept the project. However, if the IRR is less than the project’s cost of capital, reject the project.

 

115. _______ report is a document wherein all the details obtained from technical analysis, financial analysis, profitability analysis et are put together.

  1. feasibility
  2. project
  3. both
  4. none

Answer.2. project

Explanation:

A project report is a document wherein all the details obtained from technical analysis, financial analysis, profitability analysis, economic analysis, etc. are put together. A project report may be defined as a document with respect to any investment proposal based on certain information & factual data for the purpose of appraising the project.

 

116. _______ Is an essential document for procuring assistance from financial institutions and for fulfilling other formalities for the implementation of the project

  1. feasibility
  2. project
  3. progress
  4. none

Answer.1. project

Explanation:

A project report enables an entrepreneur to realize what he needs for implementing the project well in advance. It also gives a general idea of his various resource requirements like raw materials, manpower, finance, infrastructure facilities, etc., and also the means of procuring them.

Thus, it enables an entrepreneur to foresee his requirements in advance & helps him to take suitable decisions accordingly.

 

117. Department of industries and commerce formulated a scheme to set up _____ to inculcate entrepreneurial culture amongst the youth

  1. ed clubs
  2. youth clubs
  3. lion clubs
  4. none

Answer.1. ed clubs

Explanation:

Department of Industries & Commerce, Government of Kerala formulated a scheme to set up Entrepreneurship Development Clubs (ed clubs) in schools and colleges of the State to inculcate Entrepreneurial Culture amongst youth and equip them with the skills, techniques, and confidence to act as torch-bearers of Enterprise for the new generation.

 

118.  The scheme of ED Clubs will be implemented by _____

  1. business incubators
  2. industrial estates
  3. DIC
  4. none of these

Answer.3. DIC

Explanation:

The scheme of ED Clubs will be implemented by DIC. District Industries Centre (DIC) concerned will be the implementing agency General Manager, DIC shall advise the activities and have a close liaison in conducting the activities.

 

119. A grant of ______ will be given to each ED club by the department of commerce and industry.

  1. 20000
  2. 15000
  3. 18000
  4. 12000

Answer.4. 12000

Explanation:

A grant of Rs.12,000 per annum will be given as a grant to each club by the Department of Industries & Commerce. A minimum of 10% is to be contributed by the institution. Funds from other sources can also be pooled. Additional assistance will be considered on merit.

 

120. A  ______ Is an organization designed and success of entrepreneurial companies through an array of business support resources and services.

  1. business incubators
  2. industrial estates
  3. DI
  4. none of these

Answer.1. business incubators

Explanation:

Business Incubator refers to an organization that helps small businesses, startups, and individuals to develop and grow their businesses. This is achieved by offering a number of services like management training, office space training, and capital financing.

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