A 25- Year Project Has a Cost of $1,500,000 and Has

question 198

Multiple Choice

A 25- year project has a cost of $1,500,000 and has annual cash flows of $400,000 in years 1-15, and $200,000 in years 16-25. The company's required rate is 14%. Given this information, calculate
The discounted payback of the project.

• A) 5.5 years
• B) 5.70 years
• C) 5.90 years
• D) 6.10 years
• E) 6.30 years

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Definitions:

Revenue Recognition

The accounting principle that determines the specific conditions under which income becomes realized as revenue.

Depreciable Asset

An asset subject to depreciation, which means its cost is allocated over its useful life due to wear and tear, deterioration, or obsolescence.

Carrying Amount

The net value of an asset or liability as presented on the balance sheet, accounting for factors like depreciation or amortization where applicable.