Suppose a Firm Has an Asset That Originally Cost $5000

question 14

Multiple Choice

Suppose a firm has an asset that originally cost $5000 and currently has accumulated depreciation of $2000. The firm is subject to a 28 per cent income tax rate. Suppose the firm sells the asset for $2000. What was the book value before sale?

• A) $5000
• B) $2000
• C) $3000
• D) $1500

Recognize the role of practice methods (spaced, massed, overlearning) in improving memory retention.

Distinguish between different types of memories (long-term, short-term, episodic, declarative) and their characteristics.

Identify the effects of misinformation and constructive processing on memory accuracy.

Realize the challenges in memory retrieval, including the tip-of-the-tongue phenomenon.

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Definitions:

Compounded Semi-Annually

Interest calculation method where the interest is added to the principal sum twice a year, causing the interest to earn interest.

Strip Bond

A type of bond where the principal and regular coupon payments have been separated and are sold individually as zero-coupon bonds.

Interest

The cost of borrowing money, typically expressed as a percentage of the borrowed amount, paid by the borrower to the lender.

Effective Rate

The actual interest rate of an investment or loan when the compounding frequency is accounted for, giving a true reflection of the cost or yield.