Stanton Company Is Performing a Post-Audit of a Project Completed

question 120

Essay

Stanton Company is performing a post-audit of a project completed one year ago. The initial estimates were that the project would cost $490,000, would have a useful life of 9 years, zero salvage value, and would result in net annual cash flows of $90,000 per year. Now that the investment has been in operation for 1 year, revised figures indicate that it actually cost $510,000, will have a useful life of 11 years, and will produce net annual cash flows of $77,000 per year. Evaluate the success of the project. Assume a discount rate of 10%

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Definitions:

Credit

The provision of resources (like money) by one party to another, with the expectation of repayment or return in the future.

Accounts Receivable

Signifies the amount of money that customers owe to a business for products or services that have been provided but remain unpaid.

Editing Fees

Charges or costs associated with the professional editing of written material, including books, articles, and reports.

Shift of Assets

Shift of assets involves reallocating or transferring assets from one investment to another or from one asset class to another.