A Building Currently Has a Net Book Value of $650,000

question 21

Multiple Choice

A building currently has a net book value of $650,000 after three years of straight-line amortization totalling $150,000.The estimated residual value is $50,000.What was the building's original cost?

• A)$900,000
• B)$850,000
• C)$800,000
• D)$750,000

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Definitions:

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices and no tendency for change.

Call

An options contract that gives the investor the right, but not the obligation, to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.

Put

A financial derivative option that gives the holder the right, but not the obligation, to sell a security at a specified price within a specified time.

Black-Scholes Option

A mathematical model used to calculate the theoretical price of European put and call options, not accounting for dividends.