Which of the Following Estimates the Current Value of the Cash

question 53

Multiple Choice

Which of the following estimates the current value of the cash that will flow into a firm from a project in the future and deducts the amount of the initial outlay?

• A) Analysis of long-term investment
• B) Net present value (NPV)
• C) Internal rate of return (IRR)
• D) The accounting return on investment technique

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Definitions:

Acquisition Differential

The variance between the purchase price of an acquisition and the fair value of the net assets that are distinctly recognized.

Purchase Price

The amount paid or to be paid by a buyer to acquire an asset or service from a seller, not including incidental costs.

Goodwill

The intangible asset that arises when a business is acquired for more than the fair value of its net assets.

IFRS 10

Refers to the International Financial Reporting Standard that provides guidance on the consolidation of all entities that an investor controls, defining the principles of control and how it should be assessed.