A Project Has an Anticipated Stream of Annual Net Receipts

question 68

True/False

A project has an anticipated stream of annual net receipts of $20,000. Its life is 6 years. No salvage value is expected at the end of the 6 years. If the price of the project is $80,000 and the applicable discount rate is 10%, the net present value of the project is $7,106.

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Definitions:

Standard Costs

Standard costs are predetermined calculations used in cost accounting that represent the expected cost of manufacturing or producing goods under normal conditions.

Direct Labor Rate Variance

The difference between the actual cost and the standard cost of labor per unit of output, indicating efficiency in labor use.

Actual Costs

The real financial expenditures incurred by a company, as opposed to budgeted or estimated costs.

Standard Costs

Predetermined costs assigned to goods and services, used as target costs or benchmarks to compare with actual costs in order to manage and control costs.