abis the net cash (selling price less selling costs) that the firmwould receive if it sold the asset today, in an orderly fashion in anarm's-length transaction. It is an example of an exit value because itreflects a price that the firm would receive in a transaction in whichan asset leaves the firm.a. Current Replacement Costb. Net Realizable Valuec. Fair Valued. Present Value of Future Net Cash Flowse. Acquisition cost

Step 1: Definition of Asset Valuation Methods:A business acquires many assets throughout its life.…

Answered: ab is the net cash (selling price less…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 13MC: Which of the following discounts future cash flows to their present value at the expected rate of...

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True or false DCF Approach Model examines the price of "similar" assets in relation to a common variable, such as profits, cash flows, book value, and sales, to determine the asset's worth. In most cases, a company's book value and its market value are the same. 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. We only need to know the future cash flows in order to value an investment A company's resources must be worth the same as the contractual claims on those resources.
This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero A. internal race of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. future value method
Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the Initial Investment? A. internal rate of return (IRR) method B. net present value (N PV) C. discounted cash flow model D. future value method
NPV measures a. the change in firm value b. the profitability of an investment c. the change in wealth d. the present value of the future net cash flows from the investment e. all of the above
Which of the following is an economic motivation for an acquisition? Using a cash surplus. b. Diversification. c. Economies of scale. d. All of these choices.
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.
FAR- Conceptual Framework Kindly help me answer the following : 1. Which of the following should be considered a current value measure? * a. Replacement cost and discounted cash flow b. Replacement cost and exit value c. Replacement cost, exit value and discounted cash flow d. Exit value and discounted cash flow 2. Obligations to transfer an economic resource include all, except * a. Obligation to provide services b. Obligation to pay cash c. Obligation to transfer an economic resource even if a specified future event does not occur d. Obligation to deliver goods 3. Which is not a purpose of the Conceptual Framework? * a. To assist accountants in selecting among alternative accounting and reporting methods. b. To provide definitions of key terms and concepts. c. To assist IASB in the standard-setting process. d. To provide specific guidelines for resolving situations not…
The present value of an investment's future cash flows divided by its initial cost is the: O Net present value. O Internal rate of return. O Average accounting return. O Profitability index. O Payback period.
In a theoretical sense, the financial value of any asset is the present value of: Select one: A. Its past dividends B. Its expected cash flows C. Its expected sales price D. Its operating earnings
Which of the following statements true? I. All else equal, an increase in storage costs, decreases the value of the forward on an asset All else equal, an increase in convenience yield, decreases the value of the forward on an asset I. A) I. and II. are true B) I. is true and II. is false C) II. is true and I. is false D) I. and II. are false Win Win
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.
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.

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