If a Proposed Expenditure of $80,000 for a Fixed Asset

question 98

True/False

If a proposed expenditure of $80,000 for a fixed asset with a 4-year life has an annual expected net cash flow and net income of $32,000 and $12,000, respectively, the cash payback period is 4 years.

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Definitions:

Physical Substance

A characteristic of tangible assets, meaning they have a physical form and can be seen, touched, and measured.

Management Consulting

An area of public accounting ranging from development of accounting and computer systems to support services for marketing projects and merger and acquisition activities.

Financial Statements

Periodic reports published by a company for the purpose of providing information about its financial status and performance to external parties.

Fairness

The quality of making judgments that are free from discrimination, dishonesty, or injustice.