CA Final Group 1 Exam Preparation

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Questions and Answers

What is the total depreciation expense over the useful life of the project?

₹10,00,000 (correct)

₹5,00,000

₹20,00,000

₹15,00,000

What is the present value factor (PVF) for Year 2 at a cost of capital of 14%?

0.675

0.877

0.816

0.769 (correct)

How much is the total revenue for Year 3 adjusted for inflation?

₹13,24,000

₹14,15,000

₹14,84,000 (correct)

₹14,00,000

What is the total cost for Year 1 adjusted for inflation?

₹5,50,000 Signup and view all the answers

What is the correct tax amount applicable based on the net profit for Year 1?

₹1,50,000 Signup and view all the answers

What should students prioritize in their study strategy for the CA Final Group 1 exams?

A strategic approach to studying Signup and view all the answers

How many questions are included in the curated list for effective revision?

263 Signup and view all the answers

What percentage of the syllabus topics is covered by the questions in the compilation?

99% Signup and view all the answers

Which chapter in the compilation has the highest number of questions?

Portfolio Management Signup and view all the answers

What is the purpose of the 263 questions prepared for students?

To help reinforce and review concepts Signup and view all the answers

What type of questions does the compilation emphasize for effective exam preparation?

Practical questions only Signup and view all the answers

From which larger pool were the curated questions selected?

AFM Compiler 5.0 Signup and view all the answers

Which chapter covers the topic of mergers and corporate restructuring?

Mergers, Acquisitions and Corporate Restructuring Signup and view all the answers

Which factor primarily influences the discount rate applied to risky investment proposals?

The correlation between risk and return Signup and view all the answers

What is the net cash inflow per year for X Ltd.'s project?

₹200 Cr. Signup and view all the answers

What would be the impact of a 2.5% adverse variance in selling price per unit on the NPV?

Decrease in NPV due to lower contribution per unit Signup and view all the answers

When considering the risk in capital budgeting, sensitivity analysis mostly focuses on which aspect?

Analyzing how changes in key variables affect outcomes Signup and view all the answers

What initial capital cost is stipulated for the project undertaken by X Ltd.?

₹400 Cr. Signup and view all the answers

If the discount rate is 6%, what is the significance of this rate for X Ltd.'s project?

It reflects the project's expected return requirement Signup and view all the answers

How does risk aversion influence investor behavior regarding risky proposals?

Investors expect higher returns for taking on additional risk Signup and view all the answers

What element is not considered in the calculation of net cash inflow per year for the project?

Total fixed cost per year for staff salaries Signup and view all the answers

What was the closing Sensex value on 19.10.11?

3360 Signup and view all the answers

How many days experienced a positive price change?

11 Signup and view all the answers

What was the total number of days recorded in the data provided?

18 Signup and view all the answers

What does the value of t at 5% indicate here?

2.101 Signup and view all the answers

Which date had the highest closing Sensex value provided?

18.10.11 Signup and view all the answers

What was the Sensex value on the first recorded date, 1.10.11?

2800 Signup and view all the answers

What is the calculated value of μr in the given analysis?

10.26 Signup and view all the answers

What is the upper limit of the confidence interval at a 5% level of significance?

14.588 Signup and view all the answers

Which formula correctly represents the calculation of σ^r in the analysis?

$rac{(2n_1 n_2)(2n_1 n_2 - n_1 - n_2)}{(n_1 + n_2)^2(n_1 + n_2 - 1)}$ Signup and view all the answers

At what degrees of freedom is the t distribution referenced for the test conducted?

18 Signup and view all the answers

What conclusion can be drawn if the market exhibits a weak form of efficiency?

Market prices are not influenced by past prices. Signup and view all the answers

What is the net cash flow for a one-year replacement cycle in year 1?

₹16,000 Signup and view all the answers

Which replacement cycle incurs the highest total cash outflow?

Four Years Replacement Cycle Signup and view all the answers

In the two-year replacement cycle, what is the net cash flow in year 2?

₹2,000 Signup and view all the answers

What would be the total net cash flow for a three-year replacement cycle over its lifespan?

₹-12,000 Signup and view all the answers

For the four-year replacement cycle, calculate the net cash flow in year 4.

₹-28,000 Signup and view all the answers

Which cost component increases with each subsequent year in all replacement cycles?

Maintenance costs Signup and view all the answers

What is the initial cash outflow for any replacement cycle?

₹60,000 Signup and view all the answers

In which year of the three-year replacement cycle is the net cash flow the lowest?

Year 3 Signup and view all the answers

What is the total maintenance cost for a four-year replacement cycle?

₹96,000 Signup and view all the answers

What is the consequence of maintaining a machine beyond its optimal life span?

Higher repair and maintenance costs Signup and view all the answers

Study Notes

Advanced Financial Management (AFM) - Important Questions for CA Final Nov 2024 Exams

Comprehensive Question Bank: A list of 263 important practical questions, covering approximately 99% of the AFM syllabus for CA Final, Group 1, Paper 2, November 2024 exams is provided.
Source Material: The questions are meticulously compiled from a larger pool of 701 questions from the AFM Compiler 5.0 and ICAI Study Material.
Study Focus: The question bank is designed to reinforce concepts and facilitate revision, not to predict exact exam questions.

Capital Budgeting

Net Present Value (NPV) Calculation: Example questions demonstrate calculating NPV, considering factors like inflation-adjusted revenues and costs, tax rates, and cost of capital.
Risk and Return: The example question emphasizes the direct correlation between investment risk and the expected return
Project Evaluation: Examples illustrate a method for determining the feasibility of a new project.
Sensitivity Analysis: The notes discuss sensitivity analysis as a risk management tool in capital budgeting.
Optimal Replacement Cycle: The replacement cycle of a machine is determined by evaluating annual cash flows over different cycles.
Standard Deviation of Expected Values Methods for calculating the standard deviation of forecasted values used in financial decision making

Security Analysis

Weak Form Market Efficiency Testing: Methods to test for weak form market efficiency using movement of indices (e.g., Sensex) are highlighted. Example data includes dates, closing Sensex values, and signs of price changes. Analysis of runs and randomness is demonstrated.
Statistical Tests: Reference to using t-tests in the analysis.

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Description

Test your knowledge and preparation strategies for the CA Final Group 1 exams with this comprehensive quiz. Covering topics from depreciation, present value factors, and revenue adjustments, it helps you identify key areas to focus on. Assess your readiness with a selection of curated questions tailored for effective revision.