The basic principle of valuation states that the value of any asset is: O The sum of the present value of all cash flows generated by the asset O The sum of all future cash flows generated by the asset O The present value of next year's cash flow only O The degree of cash flow riskiness is not a relevant factor in valuation

The basic principle of valuation states that the value of any asset is: O The sum of the present value of all cash flows generated by the asset O The sum of all future cash flows generated by the asset O The present value of next year's cash flow only O The degree of cash flow riskiness is not a relevant factor in valuation

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 6QTD

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Which of the following statements describing the elements of intrinsic valuation is most accurate? A.) When the present value of the cashflows is discounted with the appropriate rate and this present value is positive, then the asset providing these cashflows has a value to the investor. B.) The risk-free rate is the lowest rate that an investor can earn from short-term investments. C.) Cashflows may include depreciation expenses and amortization costs. D.) A simple calculation of present values of expected cashflows of different investments using the risk free rate would be enough to determine which asset is best.
Which of the following statements is true for historical cost valuations? (Select one or more) a. Present value of cash flows using historical interest rates is an item in which cash receipts or cash payments will occur over time, these future cash flows are then discounted at the interest rate in effect at the time of the initial transaction. Balance sheet examples include notes receivable and notes payable. b. Acquisition cost is the amount paid initially to acquire the asset, examples include prepayments, land, and intangibles with indefinite lives. c. Acquisition cost is the amount paid initially to acquire the asset, examples include amounts invested in research and development for intellectual property. d. Adjusted acquisition cost is the amount paid initially to acquire an asset less accumulated depreciation and amortization, examples include equipment and intangible assets with limited lives.
How does one determine the value of any asset whose value is based on expected future cash flows?
. How does one determine the value of any assetwhose value is based on expected future cash flows?
19. Which of the following is an appropriate cost approach for determining fair value a. Using relevant information from recent transactions. b. Using present value techniques to discount cash flows. measurements? c. Using the current replacement cost of the asset. d. Using the undiscounted cash flows from the asset. 20. Which of the following concerning inputs used in determination of fair value is/are correct? 1. Only observable inputs can be used. II. Inputs that incorporate the entity's assumptions may be used. a. I only. b. Il only. c. Both I and II. d. Neither I nor II **Please provide all computations and explanations. Thank you!!
True or False Relative Valuation links an asset's value to its inherent qualities, such as its ability to produce cash flows and the risk associated with those cash flows. Value is futuristic. Equivalent to the present worth of all expected future benefits from ownership. A company's liquidation value is determined by its future cash flows. The Cost Approach Model adjusted the anticipated cash flows by discounting them to the valuation date using time value of money principles and a risk-adjusted discount rate that represents the asset's risk. The greater the size of an asset's cash flows, the lower the asset's value.
In current purchasing power technique (a) Why is it necessary to consider monetary assetsseparately from nonmonetary assets? Analyze withexamples. (b) Why does holding monetary assets lead to apurchasing power loss, but holding nonmonetary assetsdoes not lead to a purchasing power loss? Analyze withexamples
Relative Valuation links an asset's value to its inherent qualities, such as its ability to produce cash flows and the risk associated with those cash flows. Value is futuristic. Equivalent to the present worth of all expected future benefits from ownership. A company's liquidation value is determined by its future cash flows. The Cost Approach Model adjusted the anticipated cash flows by discounting them to the valuation date using time value of money principles and a risk-adjusted discount rate that represents the asset's risk. The greater the size of an asset's cash flows, the lower the asset's value.
Value-in-use is 14 O a. The discounted present value of future cash flows arising from use of the asset and from its disposal. O b. The amount at which an asset is recognized in the statement of financial position. 21 O c. The higher of amasset's fair value less cost to sell and its market value. 28 O d. The market value.
How do you evaluate an asset whose value is predicated on future cash flows?
Under IFRS, value-in-use is defined as: a. net realizable value. b. fair value. c. future cash flows discounted to present value. d. total future undiscounted cash flows.
Which of the following situations indicates that an asset is impaired?a. The net book value of the asset is less than the asset’s estimated future cash flows.b. The net book value of the asset is more than the asset’s estimated future cash flows.c. The fair market value of the asset is less than the asset’s net book value.d. The fair market value of the asset is more than the asset’s net book value.