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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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.
One method for calculating enterprise value includes the present value of which of the following cash flows? a. Terminal value of firm free cash flow from operations.b. Nonoperating income from planning period.c. Terminal value of nonoperating income.d. Firm free cash flow from planning period.e. All of the above.
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.
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
How do you calculate Fixed Asset Turnover? What is the Free Cash Flow Ratio? What is the difference between book value and Market value of an asset?
is the difference between the gross present value of the benefits of that action and the amount of investment required to achieve those benefits Oa. Net Present Value (NPV) Ob. Economic value added (EVA) OC Internal Rate of Return (IRR) d. Discounted Cash Flow
Which of the following are assumptions of the Capital Asset Pricing Model (CAPM)? Check all that apply. Consider the equation for the Capital Asset Pricing Model (CAPM): All assets are perfectly divisible and liquid. Investors assume that their investment activities won't affect the price of a stack. 7 = TRF + (TM - TRF) X bi -0.50 There are no transaction costs. 0.30 Assets have unique liquidity. In this equation, the term (M - TRF) represents the 1.00 Suppose that the market's average excess return on stocks is 12.00% and that the risk-free rate is 1.00%. Complete the following table expected returns to stocks for each beta coefficient using the Capital Asset Pricing Model (CAPM): 3.00 Cov(ri, TM) 02 M Expected Return to Stocks (%) Based on the CAPM and your calculations for the return to stocks, what does it mean when the coefficient b; > 1? O The stock's return correlates with the stock market as a whole. The stock is more volatile than the market.
sible If you want to buy a business that is growing rapidly, what is the best valuation method to use to determine a fair price for it? O A. Pay-back method OB. Book value method OC. Future earnings method OD. Market-based approach
3. If inventory turnover decreases, what will happen to the cash conversion cycle? Assume other variable are held constant. Support your answer with example. How EOQ can reduce Inventory cost?

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