An Asset Is Purchased for $120,000

question 16

Multiple Choice

An asset is purchased for $120,000. It is expected to provide an additional $28,000 of annual net cash inflows. The asset has a 10-year life and an expected salvage value of $12,000. The hurdle rate is 10%. The present value of an annuity factor of 10% for 10 years is 6.1446, and the present value of $1 discounted for 10 years at 10% is 0.3855. The present value of annuity factors at 10% for 3, 4, 5, 6, 7, 8, and 9 years are 2.4869, 3.1699, 3.7908, 4.3553, 4.8684, 5.3349, and 5.7590, respectively. The minimum useful life that would provide a 10% return is between:

• A) 3 and 4 years
• B) 5 and 6 years
• C) 7 and 8 years
• D) 9 and 10 years

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Definitions:

Myers-Briggs Type Indicator

A psychological assessment tool designed to measure individual personality types based on preferences in perception and decision-making.

Thinking

The process of considering or reasoning about something, often relevant in the context of planning, problem-solving, and decision-making in project management.

DISC Acronym

DISC stands for Dominance, Influence, Steadiness, and Conscientiousness, which are the four personality traits it assesses.

Dominance

Refers to the influence or control one party has over another, often seen in market positions or hierarchical relationships.