The Acquisition Costs of Tangible Operational Assets Do Not Include

question 82

Multiple Choice

The acquisition costs of tangible operational assets do not include:

• A)The ordinary and necessary costs to bring the asset to its desired condition and location for use.
• B)The net invoice price.
• C)Legal fees, delivery charges, installation, and any applicable sales tax.
• D)Maintenance costs during the first 30 days of use.

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Definitions:

NPV

Net Present Value; the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Payback

The length of time it takes for an investment to generate an amount of money equal to the cost of the investment, used as a basic measure of the investment's risk.

Discounted Payback

The period of time it takes for an investment’s cash flows, discounted at a particular rate, to cover its initial cost.

Discounted Payback Rule

A capital budgeting technique that determines the amount of time required for discounted cash flows from a project to repay the initial investment.