Roberts Construction Company Paid $40,000 for Equipment with a Market

question 126

Multiple Choice

Roberts Construction Company paid $40,000 for equipment with a market value of $45,000.At which of the following amounts should the equipment be recorded?

• A) $45,000
• B) $40,000
• C) $42,500
• D) $5,000

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Definitions:

Mutually Exclusive

Refers to events or choices that cannot occur or be selected at the same time.

WACC

Weighted Average Cost of Capital is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Payback Method

Payback Method is a capital budgeting technique that calculates the time required for an investment to generate cash flows sufficient to recover the initial investment cost.

Investments

Assets or items acquired with the intention of generating income or appreciation over time, including stocks, bonds, real estate, or other vehicles.