Deck 4: Economic Valuation Concepts

Question 1

Using the current value concepts developed by Edwards & Bell present costs is represented by current value date,exit market & present form.

Answer 1

False

Question 2

Which of the following is Fishers definition of capital;

A)the stock of wealth at an instant in time.
B)the accumulation of wealth over a period of time.
C)the stock of assets at a point in time.
D)the accumulation of assets over time.

Answer 2

A

Question 3

Values that could be realised if assets were sold outside the firm are best prices immediately available are best described as;

A)present cost
B)current cost
C)opportunity cost
D)historic cost

Answer 3

C

Question 4

Expected values are values we could receive in the future for output sold according to the firms planned course of action.

Question 5

Fishers definition of income involves the maintenance of capital whilst the definition offered by Higgs does not.

Question 6

According to Fisher the most fundamental form of income is enjoyment or psychic income.

Question 7

Which of the following is NOT one of the dimensions proposed by Edwards & Bell to value a part complete asset?

A)the form of the thing being valued.
B)the date of the price used in valuation
C)the market from which the price is obtained.
D)the degree of completion

Question 8

An investment on January 1 year 1 has expected receipts of on December 31 of each year of €900 for 4 years.The time value of money is 8%.What is the capital value as at January 1 for year 2.

A)€2148
B)€1548
C)€1376
D)€1327

Question 9

Under the business entity convention the value of fixed assets is the balancing item in the balance sheet.

Question 10

An investment on January 1 year 1 has expected receipts of on December 31 of each year of €900 for 4 years.The time value of money is 8%.What is the capital value as at January 1 for year 3 if it is discovered at that point in time that the expected receipt for year 4 will be €1000.Use an ex-ante approach in your calculations.

A)€1434
B)€1449
C)€1486
D)€1507