All of the Following Are True About the "Property Before-Tax

question 2

Multiple Choice

All of the following are true about the "property before-tax (PBT) shortcut", except*:

• A) The PBT shortcut is useful not only because it simplifies the investment analysis but because it avoids the necessity of estimating after-tax parameters that may be difficult to observe without error.
• B) The shortcut is made possible by the existence of a reasonably well functioning market for the type of investment asset in question.
• C) The shortcut works for estimating market value always, and for estimating investment value for investors who are typical of the marginal investors in the relevant asset market.
• D) At the PBT level the investor's own subjective opportunity cost of capital can be used as the discount rate in order to estimate that investor's "investment value" (IV) for the property.

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Definitions:

Insolvency

Inability of a person to pay her debts as they become due.

Bulk Sale

A transaction where a business sells its inventory or a significant portion of its goods all at once, usually under conditions other than the ordinary course of business.

Bankruptcy Legislation

Laws and regulations governing the process of bankruptcy, providing a legal framework for dealing with debt unable to be paid by an individual or entity.

Preference

A prioritization or favoring of certain options, creditors, or interests over others, often relevant in legal and financial contexts.