What Are the Three Standard Approaches to Valuation Under Leverage

question 30

Multiple Choice

What are the three standard approaches to valuation under leverage?

• A) CAPM, SML, and CML
• B) APR, FTE, and CAPM
• C) APT, WACC, and CAPM
• D) APV, FTE, and WACC
• E) NPV, IRR, Payback

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Definitions:

Fully Depreciated

The status of an asset after its cost has been completely written off over its useful life.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated as depreciation expense since the asset was put into use.

Equipment

Tangible assets used in the operation of a business to produce goods or provide services, not intended for sale.

Revenue Expenditure

Costs that are expensed in the income statement in the period in which they are incurred, typically related to the day-to-day operating expenses.