When Computing the Net Present Value of a Project, the Net

question 406

Multiple Choice

When computing the net present value of a project, the net amount received from salvaging the fixed assets used in the project is:

• A) Subtracted from the initial cash outlay.
• B) Included in the final cash flow of the project.
• C) Excluded from the analysis since it occurs only when the project ends.
• D) Subtracted from the original cost of the assets.
• E) Added to the net present value of the project to determine if the project is acceptable.

---

Definitions:

Commission

A fee or percentage of a transaction value paid to an agent or broker for facilitating sales, services, or other transactions.

Licensing Agreement

A formal agreement wherein a licensor grants the rights to its intellectual property to a licensee for a specified period.

Royalties

Royalties are payments made to copyright or patent holders, or to authors and musicians, as compensation for the use of their original work.

Kimble V. Marvel

A legal case where the Supreme Court decided on the issue of patent royalties continuing after the patent's expiration.