True (t) or False (f) _____ A reason some companies purchase investments is because they generate a significant portion of their earnings from investment income.
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True (t) or False (f)
_____ A reason some companies purchase investments is because they generate a significant portion of their earnings from investment income.
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- 46.When the economic method is used, the investor will recognize the investment income when: Select one: a. the company in which it invested reports income and the increase in the fair value of the investment. b. Receive dividends from the company you invested in. c. the company that invested reported income. d. the fair value of the investment has increased.we know that depreciation is linked to the net cash flows of the company's investments. In fact, any increase in depreciation amounts leads to an increase in net cash flows because: a. reduces investment-related taxesb. increases investment-related taxesc. increases the tax rate on investment gainsd. reduces the discount rate of investmentsThe cost of equity is ________. a.equal to the amount of asset turnover b.the interest associated with debt c.the weighted average cost of capital d.the rate of return required by investors to incentivize them to invest in a company
- The cost of equity is ________. Group of answer choices A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnoverAnalyze the truth of this statement: Under the cost method of accounting for investments, a dividend received is treated as a reduction in the book value of the investment. Group of answer choices This statement is true. This statement is false. There is not enough information to determine the truth of this statement. There is no such thing as a cost method.(a) – Explain the concept of Tax Deduction in WACC. Does this tax deduction make debt finance Cheaper Then Equity Finance? (b) – Compare Dividend Valuation Model with Capital Asset Pricing Model in the context of calculating cost of equity? Can use of these two methods result in differing values of business?
- True of False? Contributed capital decreases when the company has a net loss. If your answer is “False”, then explain (in one sentence) why the statement is false.Holding other factors constant, an increase in the tax rate on revenue generated by capital will: Group of answer choices not affect investment. increase business expenditure. decrease investment. increase investment.The capital investment is one that Select one: a. applies only to investment in fixed assets b. is only undertaken by large corporations c. has the prospect of long-term benefits d. None of the option e. has the prospect of short-term benefits
- A primary strength of the net present value method for analyzing investments is that it accounts for the amount and timing of earnings for that investment. A. True B. FalseChoose the correct answer: An investor using the equity method may have an acquisition price in excess of its share in the net assets at carrying value of the associate. This excess may be attributable to the fair value of assets which are more than the carrying value. Amortization of the excess of these assets will a. decrease the investment account b. increase the investment account c. increase the revenue from investment account. d. does not affect the carrying value of the investment accountWhich of the following is the correct statement about the inflation figure that is included in the money cost of capital? a. It is expected general inflation suffered by the investors b. It is historic general inflation suffered by the investors c. It is historic and specific to the business d. It is expected and specific to the business