Using a Reasonable and Realistic Estimate of Life Expectancy of a Capital

question 46

Short Answer

Using a reasonable and realistic estimate of life expectancy of a capital expenditure is important because: a. Too low of an estimate understates the profitability of the investment.
B) Too high of an estimate could lead to a wasteful use of scarce capital.
C) A profitable opportunity could be rejected if the life expectancy is not reasonable or realistic.
D) Both A and
B) e. A, B and
C)

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Definitions:

Tariff

A tax imposed on imported goods, often used to protect domestic industries from foreign competition and to raise government revenue.

Tax Revenue

The income that is gained by governments through taxation, which is used to fund public expenses.

Import Quota

A government-imposed limit on the quantity of a specific good that can be imported into a country.

Honda Automobiles

A reference to the range of vehicles manufactured by the Honda Motor Company, a multinational automotive manufacturer.