Easy Principles of Finance Practice Questions
181 free easy-difficulty Principles of Finance questions, drawn live from KomFi's calibrated bank. Build the foundation first: these test the core mechanics every harder question assumes.
- According to the Net Present Value criterion, which project should be chosen?
- Calculate the 'Profitability Index' for a project with an initial cost of 200,000 and a present value of futur
- If the required rate of return is 10%, what is the Net Present Value (NPV)?
- Which type of 'real option' is being exercised when a pharmaceutical company decides to build a full-scale man
- Calculate the Enterprise Value (EV) for a company with the following data: Market Capitalization of $1,500M, T
- What is the Multiple of Invested Capital (MOIC)?
- A financial sponsor is evaluating a Leveraged Buyout (LBO) of a manufacturing firm. The primary mechanism thro
- Which of the following scenarios best describes 'Capital Rationing' where the use of the profitability index i
- A manager says: 'Project X is better because it pays for its… — Why is this reasoning dangerous in capital bud
- A project costs 100 today and has inflows worth 115 today. What is its NPV?
- What important finance principle does simple payback ignore?
- A project costs 120 and returns 30 each year. What is its simple payback period?
- Present-value inflows are 110 and present-value outflows are 100. What is the profitability index?
- Two mutually exclusive projects conflict: one has shorter payback, while the other has higher positive NPV. Wh
- Project A pays back in two years but has NPV of −5. Project B pays back in three years and has NPV of 8. Which
- What is operating cash flow for a project?
- What is an opportunity cost in project analysis?
- Should a feasibility study paid for last year be included as a new project cash outflow today?
- Annual depreciation is $10,000 and the tax rate is 25%. What is the annual depreciation tax shield?
- A machine costs 80,000 and installation costs 5,000. Ignoring offsets, what initial equipment outlay should be
- A new product reduces an existing product’s annual cash flow by $8,000. How should project analysis treat the
- What is its Degree of Financial Leverage (DFL)?
- What is the insurer's Combined Ratio, and what does it indicate about their underwriting profitability?
- Why is EV/EBITDA often preferred over the P/E ratio when comparing companies with different capital structures
- According to the 'Lintner Model' of dividend setting, how do firms typically adjust their dividend payouts?
- Why do practitioners typically prefer Enterprise Value (EV) multiples like EV/EBITDA over Equity multiples lik
- If the deal is financed 100% with stock and there are no synergies, how will the acquirer's Earnings Per Share
- If the company pays $60 million in dividends, what is the 'Retention Ratio' (b)?
- Assuming no synergies and no deal costs, how will the acquirer's Earnings Per Share (EPS) likely change immedi
- According to the Pecking Order Theory, how would a profitable firm with significant internal cash flow typical
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