The Expected Cash Flow Approach Encompasses All of the Following

question 36

Multiple Choice

The expected cash flow approach encompasses all of the following features in determining a present value except ________.

• A)the risk-free rate of return
• B)a range of estimated future cash flows
• C)the fair value of the asset or liability
• D)the probabilities of various cash-flow outcomes

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Definitions:

Investing Activity

Operations concerning the buying and selling of long-term assets and other financial investments that do not qualify as cash equivalents.

Suppliers

Entities or individuals that provide goods or services to another entity or individual, usually in a business-to-business context.

Time Period Assumption

An accounting principle that the life of a business can be divided into discrete time periods, such as months and years, for reporting purposes.

Operating Cycle

The duration of time it takes for a company to purchase inventory, sell the goods, and collect cash from the sale.