Johnson Ltd

question 65

Multiple Choice

Johnson Ltd. determined that the net present value of an investment in technological improvements at its plant in France would be €10,000,000 if pending litigation was resolved in the company's favor and would be €2,000,000 if the courts ruled against the company. Johnson's attorneys in France assessed the probability of a favorable ruling at 70%. What is the expected net present value of the project?

• A) €10,000,000
• B) €2,000,000
• C) €6,000,000
• D) €7,600,000

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Definitions:

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Records within financial accounting that are used to track financial transactions and positions in various categories, such as assets, liabilities, equity, revenue, and expenses.

Prepaid Rent

An advance payment for rent that is recorded as an asset and then expensed over the period the payment covers.

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Items used in offices on a daily basis for functioning and managing tasks, including pens, paper, and office equipment.