Earnings Forecasts

question 61

Multiple Choice

Earnings forecasts:

• A)estimate future revenue.
• B)are calculated by taking net income and dividing by expenses.
• C)estimate future net income.
• D)are calculated by taking net income estimates and dividing by expense estimates.

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Definitions:

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis.

Leveraged Lease

A financing agreement where a lessor borrows funds to purchase an asset, which is then leased to a lessee, with the lease payments ensuring repayment of the loan.

Single Investor Lease

A lease agreement in which a single investor owns the asset and leases it directly to a company, who then has the option to buy the asset at the end of the lease term.

Conditional Sales Agreement Lease

A lease agreement where the lessee has the option to purchase the leased asset at the end of the lease term under agreed-upon conditions.