A Potential Buyer Is Interested in Purchasing a Home That

question 18

True/False

A potential buyer is interested in purchasing a home that has an assumable below-market loan.The buyer determines that the financing premium associated with the below-market loan is worth $4,300.If similar houses sell for $100,000,the buyer should be willing to pay $104,300 or more for the property.

---

Definitions:

Direct Method

A method of preparing the cash flow statement where actual cash flows from operating activities are listed, as opposed to the indirect method which adjusts net income for non-cash transactions.

Net Cash Provided

The amount of cash generated through a company's operations, after accounting for outflows and inflows.

Prepaid Expenses

Costs paid for in advance of receiving the benefit, such as insurance or rent, which are recorded as assets initially.

Free Cash Flow

The amount of cash a company generates after accounting for capital expenditures, indicating the ability to repay creditors or pay dividends and interest to investors.