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Unformatted text preview: rite­off would be $66.67 (12,000/180). Depletion is used to record the consumption of natural resources. Depletion is depreciation of wasting assets such as mines, oil wells, timber trees etc. 15 15 Types of Valuation People often use the term net book value interchangeably with net asset value (NAV), which refers to a company's total assets minus its total liabilities. Here's the formula for net book value: Net Book Value = Cost of the Asset ­ Accumulated Depreciation Assume A Company bought a CAR for $10,000 three years ago. The CAR depreciates by $1,000 a year. Thus the net book value of the CAR is: $10,000 ­ $1,000 (year 1 depreciation) ­ $1,000 (year 2 depreciation) ­ $1,000 (year 3 depreciation) = $7,000. 16 16 Market Types of Valuation Value­The current price at which investors buy or sell a share of common stock or a bond at a specific time. In the context of securities, market value is often different from book value because the market value reflects future expectations. Mos...
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This note was uploaded on 02/11/2014 for the course FIN 102 taught by Professor Han during the Fall '11 term at Kazakhstan Institute of Management, Economics and Strategic Research.

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