Which of the Following Is Not an Advantage of a Systematic

question 42

Multiple Choice

Which of the following is not an advantage of a systematic liquidation?

• A) maintaining control throughout the harvest period
• B) harvesting of the investment value can be spread out over a number of years
• C) the taxation treatment of liquidation proceeds as ordinary income
• D) the time, effort, and costs of finding a buyer for the venture can be avoided

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Definitions:

Profitability Index

A calculation used to assess the relative profitability of an investment, computed as the present value of future cash flows divided by the initial investment cost.

Present Value

The current value of a future sum of money or stream of cash flows, discounted at a specific interest rate.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.

Interest Rate

The percentage charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage of the principal.