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APSC221 Midterm 2 Question and answers rated A+ 2024/2025
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APSC221 Midterm 2 Question and answers rated A+ 2024/2025 APSC221 Midterm 2 use-related physical loss, time-related physcial loss, functional loss - correct answer reasons for depreciation market value - correct answer estimated value an asset can be sold for in an open market (real valu...

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  • October 6, 2024
  • 14
  • 2024/2025
  • Exam (elaborations)
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APSC221 Midterm 2
use-related physical loss, time-related physcial loss, functional loss - correct
answer ✔reasons for depreciation


market value - correct answer ✔estimated value an asset can be sold for in
an open market (real value if sold)


book value - correct answer ✔estimated value of an asset for accounting
purposes


scrap value - correct answer ✔real or estimate value of an asset at the end
of its physical life


salvage value - correct answer ✔real or estimated value of an asset at the
end of its useful life


managerial decisions, planning decisions, taxes - correct answer ✔reasons
for depreciation model


straight-line depreciation - correct answer ✔assumes rate of loss in value of
an asset is uniform for all periods of its useful life


declining-balance depreciation - correct answer ✔assumes rate of loss of
current period is proportional to the book value of previous period


Progressive tax rate - correct answer ✔percentage of taxable income
increases with total income

, true - correct answer ✔Taxable income equals total income minus
deductions (i.e. tax credits)


Tax credits - correct answer ✔concern certain costs that are taxed at a
reduced rate


corporate income taxes - correct answer ✔Flat tax rate regardless of profit,
but proportional to size of company


true - correct answer ✔Small business deductions can reduce tax rate


before-tax-MARR - correct answer ✔impact of taxes is implicitly taken into
account, by setting a high MARR


after-tax-MARR - correct answer ✔impact of taxes is explicitly taken into
account, by setting a low MARR


𝑀𝐴𝑅𝑅𝑎𝑓𝑡𝑒𝑟−𝑡𝑎𝑥 ≅ 𝑀𝐴𝑅𝑅𝑏𝑒𝑓𝑜𝑟𝑒−𝑡𝑎𝑥 × (1 − 𝑡) - correct answer ✔after-tax
MARR equation


Before-Tax IRR - correct answer ✔calculated using before tax cash flows


After-Tax IRR - correct answer ✔calculated using after tax cash flows.


𝐼𝑅𝑅𝑎𝑓𝑡𝑒𝑟−𝑡𝑎𝑥 ≅ 𝐼𝑅𝑅𝑏𝑒𝑓𝑜𝑟𝑒−𝑡𝑎𝑥 × (1 − 𝑡) - correct answer ✔after-tax-IRR
equation

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