Question

TRUE OR FALSE

1. Fixed costs increase or decrease according volume of production. ___________

2. When an organization acquires a target organization, one of the alternatives for human resources is to maintain the existing employees and restructure the operations. ___________

3. In case of Divestments, some foreign projects that were previously implemented may no longer be feasible if the present value of future cash flows of the project as of today is lower than the price that the project could be sold for today. ____________

4. A put option on real assets represents a proposed project that contains an option of pursuing an additional venture. _____________

Answer 1

ANS

1. False, as the fixed cost doesnt increase or decrease according volume of production on the other hand it remains same.

2. True, it happens because the employees in the organization which is acquired are skilled and experienced and with the optimum utilization of this manpower the organization can achieve growth.

3. True , as in case of disinvestments if the present value of future cash flows are lower than the price in which the project can be sold then the project is sold in the market as it will save the organization from suffering losses.

4. False, as a call option is used on real assets represents a proposed project that contains an option of pursuing an additional venture and not the put on option.