What Is the NPV of the Project If First Year

question 10

Multiple Choice

What is the NPV of the project if first year savings are only $75,000 and the project is sold?

• A) ($4,545)
• B) ($15,691)
• C) $15,691
• D) $75,000

---

Definitions:

Acquisition Differential Amortization

The process of gradually expensing the premium paid over the fair value of the net assets acquired in a business combination, affecting income statements over time.

Straight Line Amortization

A method of systematically reducing the carrying amount of an intangible asset over its useful life in equal installments.

Equity Method

An accounting technique used by firms to assess the profits earned through their investment in other companies, by recording such investments at cost and periodically adjusting to reflect the share in profits or losses.

Impairment Loss

A financial accounting concept that represents the reduction in the recoverable amount of an asset below its carrying amount.