The Present Value of the Expected Future Cash Flows of an Asset

question 126

Multiple Choice

The present value of the expected future cash flows of an asset represents the asset's

• A) liquidation value.
• B) book value.
• C) intrinsic value.
• D) par value.

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Definitions:

Fixed Product Cost

Costs associated with production that do not change with the level of output, such as salaries of permanent staff and depreciation of machinery.

Straight Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Net Income

The total profit or earnings after all expenses and taxes have been deducted from revenue.