Classify Each of the Following Statements

question 113

Multiple Choice

Classify each of the following statements:
-Hector transfers funds to his aunt so she can obtain a much needed hip operation. The aunt does not qualify as Hector's dependent.

• A)No taxable transfer occurs.
• B)Gift tax applies.
• C)Estate tax applies.

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Definitions:

Annual Return

The percentage of increase or decrease in an investment's value over a one-year period.

Present Value Factors

Present value factors are numerical values used to calculate the present value of a future amount of money or stream of cash flows given a specific interest rate.

Depreciation

The deliberate allocation of a physical asset's expenditure throughout its usable life.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.