(Ignore Income Taxes in This Problem

question 17

Multiple Choice

(Ignore income taxes in this problem.) Lambert Manufacturing has $100,000 to invest in either Project A or Project B. The following data are available on these projects:
Both projects will have a useful life of 6 years and the total cost approach to net present value analysis. At the end of 6 years, the working capital investment will be released for use elsewhere. Lambert's required rate of return is 14%.
-The net present value of Project B is:

• A) $90,355
• B) $76,115
• C) $36,115
• D) $54,355

Comprehend the realization principle and its application in revenue recognition.

Recognize the importance of economic substance over legal form in revenue recognition.

Understand the percentage-of-completion method for recognizing profits on long-term contracts.

Identify the implications of revising project cost estimates on profit recognition.

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Definitions:

Conservation of Number

A cognitive ability, identified by Piaget, where a child understands that the quantity of a set of items remains the same even if its appearance changes.

Cognitive Skill

The mental ability required for tasks that involve processing information, such as thinking, remembering, problem-solving, and paying attention.

Neo-Piagetian Research

A field of study that extends and modifies Jean Piaget's theory of cognitive development, incorporating new findings on information processing, memory capabilities, and individual differences in children.

Cognitive Functioning

Refers to the mental processes involved in acquiring knowledge and understanding, including thinking, knowing, remembering, judging, and problem solving.