If a Business Makes the Determination That an Investment Makes

question 55

Multiple Choice

If a business makes the determination that an investment makes sense at the current interest rate but before they can act the interest rates rises

• A)they will have to recalculate whether it still makes sense.
• B)it will only make the situation better so they will clearly make the investment.
• C)it will cause them to not make the investment regardless of the increase.
• D)they will go ahead with the investment because interest rates have nothing to do with whether an investment makes sense.

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Definitions:

Useful Life

The estimated period over which an asset is expected to be used by the entity, or be productive.

Salvage Value

The projected sell-on value of an asset upon reaching the end of its operational lifespan.

Useful Life

The estimated duration of time over which an asset is expected to be functional and generate revenue for its owner.

Annual Expected Income

An estimate of the amount of money that is anticipated to be earned over a one-year period from various sources of income.