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 12MC: Which of the following does nor assign a value to a business opportunity using time-value...

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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.
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…
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
Discounting an investment’s cash flows using the internal rate of return will result in which of the following? Group of answer choices net present value of one net present value of zero positive net present value negative net present value
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…
1. In discounted cash flows method, the value of investment opportunities is highly dependent on the value that the asset will generate from now until the future. True False 2. Discounted cash flows analysis can be done by determining the present value of the Net Cash Flows of the investment opportunity. True False 3. The amount that should be included in determining the value of the asset is the amount of cash that will be available for the claims of the equity owners and creditors. True False 4. Relevance and reliability of information are important in financial modelling. True False 5. In financial modeling, the usual growth indicators used are inflation, population growth and GNP/GDP growth. True False 6. In financial modelling, you need the inflation to be used as driver for certain operating and capital expenditures. True False 7. The value of a firm's invested capital is Php300 million. Its return on invested capital is 12 percent, and its WACC is 10.5 percent. What is the…
The future value of an uneven cash flow stream is also referred to as its discounted value amortized value consolidated value terminal value O periodic value

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