By the Capitalization-Of-Cash Flows Method, the Value of an Asset

question 53

Multiple Choice

By the capitalization-of-cash flows method, the value of an asset is a function of

• A)the book value of the asset
• B)the risk of the asset's cash flows
• C)the age of the asset
• D)both the book value and the age of the asset

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Definitions:

Life Expectancy

The average period that a person may expect to live, based on statistical averages for a particular population.

Social Security Retirement System

A government program that provides retirement income to eligible retirees, funded by payroll taxes from current workers and employers.

Income Redistribution

A policy aimed at balancing economic inequality by reallocating wealth and income from wealthier segments of society to poorer ones through taxes, welfare systems, or other means.

Social Security Benefit Formula

The calculation used to determine the amount of benefits one receives from the Social Security Administration, based on earnings history and age.