An Estimate of an Asset's Value to the Company, Calculated

question 39

Multiple Choice

An estimate of an asset's value to the company, calculated by discounting the future cash flows from the investment at an appropriate rate and then subtracting the initial cost of the investment, is known as:

• A) Annual net cash flows.
• B) Rate of return on investment.
• C) Net present value.
• D) Payback period.
• E) Unamortized carrying value.

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Definitions:

Hourly Wage

Compensation paid to employees based on the number of hours worked, typically expressed as an amount of money per hour.

Parking

The act of stopping and disengaging a vehicle and leaving it unoccupied.

Implicit Costs

Additional costs that do not appear on the financial statements of a company. These costs include items such as the opportunity cost of capital.

Economic Profits

Profits that exceed the opportunity costs of all resources used by the firm, including both explicit and implicit costs.