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B Com Exam  >  B Com Tests  >  Test: Project Management - 2 - B Com MCQ

Test: Project Management - 2 - B Com MCQ


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10 Questions MCQ Test - Test: Project Management - 2

Test: Project Management - 2 for B Com 2024 is part of B Com preparation. The Test: Project Management - 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Project Management - 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Project Management - 2 below.
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Test: Project Management - 2 - Question 1
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What is the primary objective of Social Cost-Benefit Analysis (CBA)?

Detailed Solution for Test: Project Management - 2 - Question 1
The primary objective of Social Cost-Benefit Analysis (CBA) is to determine the total annual returns on a particular investment to the economy as a whole, irrespective of to whom these returns accrue. This is aimed at evaluating the overall benefits and costs associated with a project from a societal perspective, rather than just focusing on private profits or the performance of government agencies.
Test: Project Management - 2 - Question 2
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What type of benefits are those benefits that can be computed and measured in terms of money?

Detailed Solution for Test: Project Management - 2 - Question 2
Real benefits are those benefits that can be computed and measured in terms of money. These benefits are quantifiable and can be directly linked to the project's outputs, such as increased production, revenue, or savings. Real benefits are a crucial component in the cost-benefit analysis of a project.
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Test: Project Management - 2 - Question 3
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What criterion is considered the most reliable for project evaluation in Social Cost-Benefit Analysis?

Detailed Solution for Test: Project Management - 2 - Question 3
The most reliable criterion for project evaluation in Social Cost-Benefit Analysis is the B/C (Benefit-Cost) ratio. If the B/C ratio is greater than 1, it indicates that the benefits of the project outweigh the costs, making the project beneficial. This criterion takes into account the ratio of total benefits to total costs, providing a comprehensive measure for evaluating the feasibility of a project.
Test: Project Management - 2 - Question 4
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What does the social rate of discount used in project evaluation reflect?
Detailed Solution for Test: Project Management - 2 - Question 4
The social rate of discount used in project evaluation reflects society's preference for present benefits over future benefits. This rate takes into account the fact that future benefits and costs are not treated equally with present benefits and costs. It is used to discount future cash flows back to their present value, considering the time value of money and the preference for immediate benefits.
Test: Project Management - 2 - Question 5
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What is one of the main advantages of project finance?
Detailed Solution for Test: Project Management - 2 - Question 5
One of the main advantages of project finance is that it limits the risk to the project sponsor's other assets. By setting up an independent project company with its own balance sheet, the project sponsor's other assets are not at risk in case the project encounters difficulties or fails. This separation helps protect the sponsor from potential losses related to the project.
Test: Project Management - 2 - Question 6
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What is an essential consideration for a project to be suitable for project finance?
Detailed Solution for Test: Project Management - 2 - Question 6
A project suitable for project finance should have predictable and contractually guaranteed revenues. This means that the project's earnings and expenses should be foreseeable and supported by solid contracts, such as power purchase agreements (PPAs) or off-take agreements. This predictability helps ensure that the project can generate sufficient cash flows to cover its obligations.
Test: Project Management - 2 - Question 7
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What does capacity utilization refer to in project evaluation?
Detailed Solution for Test: Project Management - 2 - Question 7
Capacity utilization refers to the percentage of a project's capacity that is operational and being utilized. It indicates how efficiently the project is being run and how much of its potential capacity is actually being utilized to generate benefits. High capacity utilization generally indicates better operational efficiency.
Test: Project Management - 2 - Question 8
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What role does the project company play in project finance?
Detailed Solution for Test: Project Management - 2 - Question 8
In project finance, the project company plays the role of taking on the debts and loans for the project. The project company is an independent entity established to manage and execute the project. It holds the project's assets, enters into contracts, and secures financing for the project, often through loans provided by lenders. The loans are repaid based on the project's predicted cash flows.
Test: Project Management - 2 - Question 9
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What is a major drawback of project finance from the project sponsor's perspective?
Detailed Solution for Test: Project Management - 2 - Question 9
A major drawback of project finance from the project sponsor's perspective is the loss of control over the project company. When using project finance, the project company is usually set up as an independent entity with its own balance sheet. This separation means that the project sponsor may have limited control over the day-to-day operations and decisions of the project company, which can be a disadvantage.
Test: Project Management - 2 - Question 10
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What factor helps determine the cost of loans in project finance?
Detailed Solution for Test: Project Management - 2 - Question 10
The level of predictability and reliability in project revenues helps determine the cost of loans in project finance. Lenders assess the project's ability to generate steady and predictable cash flows to repay the loans. If the project's revenues are well-supported by contracts or other reliable sources, lenders are more likely to offer loans at a lower cost. This reflects the lenders' confidence in the project's ability to meet its financial obligations.
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