Risk is the potential future negative impact value and or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss.Investor face risk about the return of their capital. Firm face risk in funding and operating business projects. Most financial decision involve comparing risk and return and determining which outweighs the others.
A potential future negative impact value and or cash flows is often discussed in terms of...
QUESTION 1 The future value of a going concern is often measured by a discounted cash flow model. True False QUESTION 2 Replacement value insurance helps insure against the impact of inflation. True False QUESTION 3 One valuation technique should be used universally and consistently for all valuation decisions. True False QUESTION 4 Greed was a significant factor in the financial crisis that began in 2008. True False QUESTION 5 Mismatching cash flows and discount rates when attempting to value...
When we express the value of a cash flow or series of cash flows in terms of dollars today, we call it the ________ of the investment. If we express it in terms of dollars in the future, we call it the ________. A. future value; present value B. discount factor; discount rate C. present value; future value D. ordinary annuity; annuity due
Gravy Incorporated owns patents with a book value of $190,000. Expected future cash flows of $210,000 is estimated. The patent has a fair value of $140,000. How much, if any, Is the impairment loss? Explain your response.
To value a bond you must take the future value of all future cash flows by using the NPV formula. true or false
1. Clacher plc and Holmes plc are two firms with identical prospects regarding their future cash flows. The cash flows are expected to remain constant forever into the future. The market assesses the prospects of the two companies and believes that there is a 30% probability that the cash flow will be £20,000 and a 70% probability it will be £40,000. The firms are the same in all respects except for their capital structures. Clacher is entirely financed by equity...
An impairment loss must be recognized when... A) The present value of the asset's future cash flows is higher than the asset's fair value B) The present value of the asset's future cash flows is lower than the asset's fair value C) An asset's book value is lower than its fair value D) An asset's book value is higher than its fair value
the ____ of any asset is equal to the present value of its expected future cash flows discounted at the investors required rate of return
If the process of coming back to present value (PV) from future cash flows is called discounting, then the process of going to future value (FV) from present value (PV) is called compounding. (TRUE/FALSE)?_______________________ For a corporate bond, the quoted interest rate minus the real risk-free rate is equal to which of the following? Nominal interest rate Real inflation rate plus nominal interest rate Market risk premium The sum of inflation premium, default risk premium, liquidity premium and maturity risk premium
The measurement of an asset's value based on the discounted future cash flows relating to the asset is present value. future value. historical value. net realizable value.
The future value of a going concern is often measured by a discounted cash flow model. True or false?