Nebraska Communications Is Considering the Purchase of a New Satellite

question 48

Multiple Choice

Nebraska Communications is considering the purchase of a new satellite. The firm believes the satellite will help generate future earnings. In addition, the firm recognizes the tax benefits of a lower net income provided by the annual ________ of the asset.

• A) inventory valuation
• B) declining balance
• C) appreciation
• D) depreciation

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Definitions:

Collection Time

The duration it takes for a business to receive payments owed by its customers after a sale has been made.

Collection Float

The time delay between when a check is written and when the funds are actually deducted from the payer's account.

Treasury Bills

Short-term government securities issued at a discount from their face value and maturing at par.

Interest Rate

An Interest Rate is the percentage of principal charged by a lender for the use of its money or the rate earned on deposited funds.