Question

1. Choose one that correctly states

a Trademarks and patents are highly liquid

b For a decision making, market value is more important than book value

c To be a healthy company, equity should be more than debt

d Liabilities are a residual claim against a company’s asset

e Average tax rate is the portion of total tax payment out of total revenue

sj. Currently Nathan deposits $300 at the end of each month into an IRA and his company will match 40% of his deposit amount. He will retire in 45 years. Assuming his account will earn 8.5% interest rate (APR), how much he can withdraw monthly after his retirement after-tax basis? (Assume he will live for another 25 years after retirement, his average tax rate will be 20%, and his deposit amount will remain constant).

$15,387

$17,062

$11,573

$16,890

$7,040

Answer 1

1 For decision making purpose, the market value of a company is more important than the book value of the company, because the market value of the company will reflect the all such current changes in the the value of the company, whereas the book value is a historical kind of valuation method, which is not appropriate for the use in the valuation purposes or other purposes.

Other statements are incorrect because Trademarks are highly illiquid and liabilities are not residual claim.

Correct answer is option ( B)for a decision making, market value is more important than the book value.