Match the items of List-I with the items of List-II. List-IList-II (i) Financial Break-even-point (a)…
The discount rate at which NPV equals zero is the (iii) Internal Rate of Return [(a)-(iii)]; the theory that overall cost of capital (ko) remains constant across all degrees…
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Match the items of List-I with the items of List-II.
| List-I | List-II |
|---|---|
| (i) Financial Break-even-point | (a) Rate of discount at which NPV is zero. |
| (ii) Cost-Volume-Profit Analysis | (b) Cost of capital remains the same for different degrees of financial leverage. |
| (iii) Internal Rate of Return | (c) Analysis to study relationship among fixed costs, variable costs, sales volume and profits. |
| (iv) Net Operating Income Approach | (d) The minimum level of EBIT needed to satisfy all fixed financial charges. |
Answer and explanation
Correct answer A
The discount rate at which NPV equals zero is the (iii) Internal Rate of Return [(a)-(iii)]; the theory that overall cost of capital (ko) remains constant across all degrees of financial leverage is the (iv) Net Operating Income Approach [(b)-(iv)]; studying the interrelationship among fixed costs, variable costs, sales volume, and profits is (ii) Cost-Volume-Profit Analysis [(c)-(ii)]; and the minimum EBIT needed to cover all fixed financial charges (where EPS = 0) is the (i) Financial Break-even-point [(d)-(i)]. Thus, (a)-(iii), (b)-(iv), (c)-(ii), (d)-(i) is correct.
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UGC NET Commerce