When Firms Dispose of a Long-Lived Asset Before the End

question 137

True/False

When firms dispose of a long-lived asset before the end of its useful life,the difference between the net book value of the asset and the sale proceeds is a gain or loss from a discontinued item.

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Definitions:

Npvgo

Net Present Value of Growth Opportunities; a measure evaluating the profitability of future investments by comparing their present value to the initial outlay.

Required Return

The minimum annual return rate that incites people or companies to allocate resources to a particular investment or project.

Constant Growth

A model in finance that assumes a stock’s dividends will continue to grow at a uniform rate indefinitely, used to estimate the stock's current value.

Dividends

Proceeds allocated by a corporation to its share owners, principally derived from the business's earnings.