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Upon the Sale of Equipment at the End of Its

question 92

True/False

Upon the sale of equipment at the end of its useful life,tax liability will be incurred whenever the book value of the equipment exceeds the sales price.


Definitions:

APR

The Annual Percentage Rate, which is the interest rate for a whole year on a loan, including fees.

Present Value Payback Period

A capital budgeting technique that calculates the period of time required for the present value of future cash flows to cover the initial investment cost.

NPV

Net Present Value, a calculation used to determine the current value of a series of future cash flows.

PI

The profitability index (PI), in financial management, is a method used to evaluate the desirability of an investment or project, calculating the ratio of the present value of future cash flows to the initial investment.

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