Heap Corporation Is Considering an Investment in a Project That

question 66

Multiple Choice

Heap Corporation is considering an investment in a project that will have a two year life. The project will provide a 10% internal rate of return, and is expected to have a $40,000 cash inflow the first year and a $50,000 cash inflow in the second year. What investment is required in the project? (Ignore income taxes.) Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.

• A) $74,340
• B) $77,660
• C) $81,810
• D) $90,000

Recognize the factors affecting the carrying value of long-lived assets and the impact of different depreciation methods used.

Determine the cost capitalization rules for tangible and intangible assets.

Explain the concept and accounting treatment for asset revaluation.

Describe the treatment of exchange transactions and the conditions under which gains or losses are recognized.

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Definitions:

Concept

A mental representation of a category, object, or idea that helps in understanding and categorizing the world.

Algorithm

A step-by-step procedure or formula for solving a problem or completing a task.

Prototype

A prototype is an original model or preliminary version of a product from which other forms are developed or copied, often used in the design and testing phases of product development.

Basic Concepts

Concepts that have a moderate number of instances and that are easier to acquire than those having few or many instances.