Which of the Following Is True for Intrinsic Values

question 17

Multiple Choice

Which of the following is true for intrinsic values?

• A)It is the present value of future expected cash flows.
• B)It is unaffected by changes in interest rates.
• C)It must be below current market price for a stock purchase to be acceptable.
• D)It is the undiscounted value of the cash that can be taken out of a business during its remaining life.

---

Definitions:

Double-Declining-Balance

A method of accelerated depreciation which doubles the normal depreciation rate, reducing the value of an asset more quickly in its early years.

Salvage Value

The predicted residual value of an asset upon reaching the end of its practical lifespan.

Depreciation Expense

The allocated amount of the cost of a tangible or physical asset over its useful life.

Useful Life

The estimated period over which it is expected that an asset will be profitable or useful to its owner.