The Assets of a Company Total $700,000; the Liabilities, $200,000

question 209

Multiple Choice

The assets of a company total $700,000; the liabilities, $200,000. What are the net assets?

• A)$900,000.
• B)$700,000.
• C)$500,000.
• D)$200,000.
• E)It is impossible to determine unless the amount of the common stock is known.

Comprehend the application and implications of net present value (NPV) in investment decision-making.

Understand the relevance and application of the internal rate of return (IRR) in evaluating investment opportunities.

Grasp the concepts of salvage value, cash inflows, and depreciation in the context of capital budgeting.

Appreciate the impact of tax rates on investment decisions and profitability.

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Definitions:

Constant Costs

Costs that remain the same in total, regardless of changes in the volume of goods or services produced.

Average Variable Cost

The total variable costs of production divided by the quantity of output produced; it shows the variable cost per unit.

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced, decreases as production increases.

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the cost per unit of production.