A. The concept of a self liquidating asset implies that...? B. The cost of debt

Question

A. The concept of a self liquidating asset implies that...?

B. The cost of debt is determined by taking the...?

C. Elgin Battery manufactures had sales of $900,000 in 2006 and the cost of goods sold represnted 65 percent of sales. Selling a adminstrative expences were 9 percent of sales. Depreciation expence was $10,000 and intrest expence for the year was $8,000. The firms tax rate is 30 percent. What is the dollar amount of taxes paid?

D. Assume a corporation has earnings before depreciation and taxes of $100,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company?

E. Asset accounts on the balance sheet are listed in the order of...?

Explanation / Answer

A.

The concept of self liquidation asset implies that the asset has depreciable value.

Self liquidating asset: This is the asset used for production and the value of which is liquidated over the life of the asset as depreciation.

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