Tecktroniks Company Reported in Its Annual Report Software Refinement Expenses

question 54

Multiple Choice

Tecktroniks Company reported in its annual report software refinement expenses of $12 million, $15 million, and $18 million for fiscal years 2005, 2006, and 2007, respectively. At the end of fiscal 2007, it had total assets of $140 million. Net income was $20 million for fiscal 2007, and it had a marginal tax rate of 35%.
-If software refinement had been capitalized each year and amortized over a three-year period beginning in the year the cost was incurred, net income for fiscal 2007 would have been:

• A)$31.7 million.
• B)$29.75 million.
• C)$21.95 million.
• D)$14.95 million.

Evaluate investment options based on present value calculations.

Apply present value concepts to various financial decision-making scenarios, including savings, investments, and loans.

Understand and calculate the future value of investments.

Recognize which financial problems require present value calculations and which do not.

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Definitions:

Marketable Securities

Financial instruments that can be easily converted into cash at a reasonable price in the short term.

Money Market

A segment of the financial market in which financial instruments with high liquidity and short maturities are traded.

Interest Rate Risk

The potential for investment losses due to changes in interest rates.