A Firm Is Selling an Old Asset Below Book Value

question 67

Multiple Choice

A firm is selling an old asset below book value in a replacement decision. As the firm's tax rate is raised, the net cash outflow (purchase price less proceeds from the sale of the old asset) would:

• A) go up.
• B) go down.
• C) remain the same.
• D) more information required.

---

Definitions:

Skewed

A distribution that is not symmetrical, with a majority of data points lying on one side of the mean.

Bimodal

A distribution with two different modes, or peaks, in a set of data, indicating two dominant frequencies or values.

Normal Distribution

Normal distribution, often called a bell curve, describes a symmetrical distribution of data where most values cluster around a central mean.

Outliers

Outliers are data points that differ significantly from other observations, often lying far outside the majority of a data distribution.