A Patent Should

question 84

Multiple Choice

A patent should

• A)be amortized over a period of 20 years.
• B)not be amortized.
• C)be amortized over its useful life or 20 years, whichever is longer.
• D)be amortized over its useful life or 20 years, whichever is shorter.

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Definitions:

Payback Period

The time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.

Net Present Value

Net present value is a financial metric that calculates the present value of all cash flows associated with a project, including both inflows and outflows, to determine its profitability.

Time Value of Money

The notion that money’s worth is greater in the present than an equivalent sum in the future, attributed to its earning potential.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.