A Bargain Price for an Existing Business Is NOT a Good

question 1

Multiple Choice

A bargain price for an existing business is NOT a good deal for the buyer when the

• A) seller intends to open a competing business in the same locality.
• B) business is losing money.
• C) neighborhood is deteriorating.
• D) All of these are correct.

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Definitions:

Net Investment

The total amount spent on purchasing new capital assets minus depreciation on existing assets, indicating the actual increase in a company's capital stock.

Cash Operating Costs

Expenses directly related to the daily operational activities of a business, excluding financing costs and taxes.

Depreciated

An accounting process of allocating the cost of a tangible asset over its useful life, reflecting its decrease in value over time.

Marginal Tax Rate

The rate at which an additional dollar of income would be taxed, giving insight into the impact of potential income increases on one's tax burden.