You are an investor trying to determine the total value of a firm's assets (recall that one way to summarize the value of a company is the total value of its assets). Which of the following best describes the true "market value of the firm's assets that you would be looking for as a potential investor seeking to find the value of the firm? A. The assets' total market value is the cost associated with acquiring those assets. B. The assets' total market value can be found by adding up all of the individual asset values on the firm's balance sheet. C. The market value of the firm's assets is the total value the firm could get if it sold all of its tangible assets (machines, buildings, etc.) to the highest bidder. D. The assets' total market value is the present value of all of the cash flows that they can generate within the firm. E. Both C and D are correct.

You are an investor trying to determine the total value of a firm's assets (recall that one way to summarize the value of a company is the total value of its assets). Which of the following best describes the true "market value of the firm's assets that you would be looking for as a potential investor seeking to find the value of the firm? A. The assets' total market value is the cost associated with acquiring those assets. B. The assets' total market value can be found by adding up all of the individual asset values on the firm's balance sheet. C. The market value of the firm's assets is the total value the firm could get if it sold all of its tangible assets (machines, buildings, etc.) to the highest bidder. D. The assets' total market value is the present value of all of the cash flows that they can generate within the firm. E. Both C and D are correct.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 12MC: The cost of equity is _______. A. the interest associated with debt B. the rate of return required...

See similar textbooks

Similar questions

The cost of equity is ________. Group of answer choices A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
What is preferable from the point of view of an investor? a. To value the business using the Asset Valuation method; or b. To value the business using the Equity Valuation
The cost of equity is ________. a.equal to the amount of asset turnover b.the interest associated with debt c.the weighted average cost of capital d.the rate of return required by investors to incentivize them to invest in a company
Multiple Choice Questions 1. The following statements are correct for the Economic Value Added (EVA), except, A. The most conventional way to determine the value of the asset is through its economic value added. B. Economic value Added (EVA) is a convenient metric in evaluating investment as it quickly measures the ability of the firm to support its cost of capital using its earnings C. EVA is the excess of the company’s equity after deducting the cost of capital. D. The general concept here is that higher EVA is better for the firm 2. Ernesto, Inc. has projected average earnings every year of P 100 million. Debt to Equity Ratio is 3:1. After tax cost of debt is 5% while cost of equity is 10%. The Board of directors of the company decided to sell the company for P 1 Billion. Compute for the Economic Value Added. (EVA). A. 5 Million B. P 50 Million C. P 0 D. P 25 Million 3. SPRO Corp is planning to expand and new projects is expected to have an EVA of P200,000. The annual coast of…
The cost of equity is _______. A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
The financial market offers the investors a means to sell their financial asset thereby a. Increasing the wealth of investor b. Offering liquidity to such assets c. Decreasing the wealth of investor d. Diluting the liquidity of such assets
Which of the following considers both time value and risk factor of the business concern? a. Sales Maximization b. Asset Maximization c. Profit Maximization d. Wealth Maximization
Which of the following statement is INCORRECT? Question 15 options: 1) The finance manager manages the short-term balance sheet items of the company, such as current assets and current liabilities. 2) The finance manager uses investment evaluation techniques to decide whether to purchase fixed assets. 3) The finance manager seeks to maximise the firm’s wealth when deciding on the choice of capital sources such as debts and equity. 4) The right-hand side of the balance sheet refers to the company’s investment decisions to buy fixed assets to generate returns.
What is the calculation for Return On Asset (ROA) for the firm in that picture?
What is the primary purpose of computing the cost of capital? a. To determine the market value of the company's shares b. To assess the company's liquidity position c. To evaluate the profitability of investment projects d. To compare the company's performance with industry peers
If your goal is to determine how effective a firm in managing its assets, you would examine O Profit margin, Current ratio, Debt ratio O Price-earnings ratio, Times-interest-earned ratio, Operating Margin O Inventory turnover, Receivables turnover, Assets turnover O Quick ratio, Debt ratio, Times-interest-earned ratio
ab is the net cash (selling price less selling costs) that the firm would receive if it sold the asset today, in an orderly fashion in an arm's-length transaction. It is an example of an exit value because it reflects a price that the firm would receive in a transaction in which an asset leaves the firm. a. Current Replacement Cost b. Net Realizable Value c. Fair Value d. Present Value of Future Net Cash Flows e. Acquisition cost