How Would the Deprival Value of an Asset Be Determined

question 20

Multiple Choice

How would the deprival value of an asset be determined?

• A) It is the present value of the future cash flows to be generated by the asset, except where the current replacement cost or net selling price is less than that value.
• B) It is the net selling price, except where the value to the business (present value) is less, or the current replacement cost greater.
• C) It is the current replacement cost, where the present value is less than the current replacement cost and greater than the net selling price.
• D) It is the value to the business of the asset (present value), within the bounds that this value is not less than the net selling price or greater than its current replacement cost.

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Definitions:

Merchant Ships

Commercial vessels used in international trade to transport goods and sometimes passengers.

Risk Aversion

The tendency of individuals to prefer outcomes with lower uncertainty over outcomes with higher uncertainty, even if the latter may offer a higher expected return.

Equilibrium Premium

The price at which the supply and demand for insurance coverage balance, setting a market rate for premiums.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the point where the supply and demand curves intersect.