Watson Limited Acquires the Net Assets of Lake Limited for a Cash

question 22

Multiple Choice

Watson Limited acquires the net assets of Lake Limited for a cash consideration of $160 000. One half is to be paid on acquisition date and the other half is payable in one year's time. The appropriate discount rate is 8% p.a. The present value of the cash outflow in one year's time is:

• A) $800 000
• B) $74 072
• C) $86 402
• D) $72 728

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Definitions:

Self-actualization

The realization or fulfillment of one's talents and potentialities, especially considered as a drive or need present in everyone.

Needs Hierarchy

A theory in psychology, proposed by Abraham Maslow, which posits that people are motivated to fulfill basic needs before moving on to other, more advanced needs.

Oxytocin

A hormone, secreted by the pituitary gland, that stimulates uterine contractions during childbirth, facilitates the ejection of milk during nursing, and seems to promote, in both sexes, attachment and trust in relationships.

Liquid Trust

A concept referring to a spray or product claimed to contain oxytocin, which supposedly increases trust and bonding between people.