-Which of the Following Must Be Considered in Computing the Terminal

question 97

Multiple Choice

-Which of the following must be considered in computing the terminal value of a replacement project?

• A) operating cash flow for the final year
• B) after-tax proceeds from the sale of a new asset
• C) before-tax proceeds from the sale of an old asset
• D) before-tax proceeds from the sale of a new asset

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Definitions:

Equilibrium

A state in which the conflicting forces of demand and supply are in balance. When a market is in equilibrium, the decisions of consumers and producers are brought into harmony with one another, and the quantity demanded will equal the quantity supplied.

Revenue

Aggregate income a company secures from its sales of products or rendering of services in a given period.

Excise Tax

A tax imposed on specific goods, services, or activities to raise revenue or discourage their use.

Revenue

The total income generated by a business or organization from its normal business operations.