Term Loan Assessment Quiz

What is the purpose of a term loan appraisal?

• To calculate the tax liability of the borrower

• To evaluate the market demand for the borrower's products

• To determine the credit score of the borrower

• To assess the ability of the unit to repay the loan and interest from surplus generated by utilizing fixed assets

What is the formula for Debt Service Coverage Ratio (DSCR)?

• (EBITA + Depreciation + Annual Interest on Term Loan) / (Annual Instalments on Term Loan + Annual Interest on Term Loan)

• (Gross Profit + Depreciation + Annual Interest on Term Loan) / (Annual Instalments on Term Loan + Annual Interest on Term Loan)

• (Net Profit After Tax + Depreciation + Annual Interest on Term Loan) / (Annual Instalments on Term Loan + Annual Interest on Term Loan)

• (Profit Before Tax + Depreciation + Annual Interest on Term Loan) / (Annual Instalments on Term Loan + Annual Interest on Term Loan)

What is the purpose of a Sensitivity Analysis in term loan assessment?

• To evaluate the project's internal rate of return

• To determine the interest coverage ratio of the project

• To calculate the break even point of the project

• To assess the impact of variations in project parameters on the project's viability

What is the Break Even Point (BEP) in the context of term loan assessment?

• The point at which the unit reaches its maximum capacity

• The level of production/sales at which the unit makes a loss

• The point at which the unit achieves maximum profitability

• The level of production/sales at which the unit neither makes profit nor loss

What is the purpose of an Interest Coverage Ratio in term loan assessment?

• To measure the ability to pay interest from the earnings of the firm

• To calculate the break even point of the project

• To assess the impact of variations in project parameters on the project's viability

• To evaluate the project's internal rate of return

What is the purpose of a Techno Economic Viability (TEV) study in project financing?

• To assess the technical feasibility and economic viability of the project

• To determine the interest coverage ratio of the project

• To calculate the break even point of the project

• To evaluate the project's internal rate of return

What is the acceptable average Debt Service Coverage Ratio (DSCR) for a project?

• 1.00

• 2.00

• 1.75

• 1.25

What is the purpose of a Net Present Value (NPV) calculation in project financing?

• To determine if the project is financially viable

• To assess the impact of variations in project parameters on the project's viability

• To evaluate the project's internal rate of return

• To calculate the break even point of the project

What is the formula for calculating the Break Even Point (BEP) in terms of value?

• Contribution / Sales

• Fixed cost x Sales / (Sales - Variable cost)

• Fixed Cost / (Unit sale price - Unit variable cost)

• Sales - Variable Cost / Fixed Cost

What is the formula for calculating the Break Even Point (BEP) in terms of Quantity?

• Fixed Cost / (Unit sale price – Unit variable cost)

• Fixed Cost / (Unit sale price + Unit variable cost)

• (Fixed Cost- Variable Cost) / (Unit sale price – Unit variable cost)

• (Fixed Cost + Variable Cost) / (Unit cost)