Profits Will Be

question 9

Multiple Choice

Profits will be:

• A) high regardless of the degree of rivalry.
• B) high when the degree of rivalry is high.
• C) low when the degree of rivalry is low.
• D) low when the degree of rivalry is high.

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Definitions:

Double Declining-Balance Method

An accelerated depreciation method that uses up to twice the straight-line rate multiplied with the book value of asset to calculate depreciation expense. Residual value is not subtracted from the cost of an asset in this calculation.

Equipment Purchase

Equipment purchase involves acquiring physical assets, such as machinery or office equipment, that are used in the operations of a business.

Residual Value

Residual value is the estimated amount that an asset will be worth at the end of its useful life, after depreciation has been taken into account.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or wear and tear.