An Asset Was Purchased for $400,000

question 182

Multiple Choice

An asset was purchased for $400,000.It had an estimated salvage value of $80,000 and an estimated useful life of 10 years.After 5 years of use, the estimated salvage value is revised to $64,000 but the estimated useful life is unchanged.Assuming straight-line depreciation, depreciation expense in Year 6 would be

• A)$48,000.
• B)$35,200.
• C)$24,000.
• D)$33,600.

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Definitions:

Net Present Value

Net Present Value (NPV) is a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time, used to assess the profitability of an investment.

Postaudit

The process of reviewing and analyzing the outcomes of a project or investment after its completion to determine if expected results were achieved.

Cost of Capital

Represents the rate of return that a company must earn on its investment projects to maintain its market value and attract funds.

Capital Rationing

The process of selecting profitable projects under the constraint of limited available investment funds.