Which one of the following statements is correct concerning the payback rule?

1 answer:

7 0

The correct concerning the payback rule is rule is flawed because it ignores all cash flows after some arbitrary point in time.

Payback period in capital budgeting refers to the time required to recover funds spent on an investment or to reach breakeven. Example: If at the beginning of year 1 he invests $1,000 and at the end of year 1 and his second year he earns $500, it pays for itself within 2 years.

The number of years it will take to recover the money invested. For example, if it takes 5 years to recover the cost of an investment, the payback period is he 5 years.

Payback period is defined as the number of years required to recover the original cash investment. In other words, the period during which a machine, plant, or other investment has generated sufficient net income to cover its investment costs.

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In January, 2006, Findley Corporation purchased a patent for a new consumer product for $720,000. At the time of purchase, the p

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Answer:

b. $360,000.

Explanation:

Data provided in the question

Purchase value of the patent = $720,000

At the time of purchase, the patent life is 15 years

And, the useful life of the patent is 10 years

So, the amortization expense recorded value is

= $720,000 ÷ 10 years × 5 years

= $360,000

The five years is counted from the year 2006 to the year 2011

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Answer:

a prior period adjustment

Explanation:

A prior period adjustment -

It is the correction of the accounting error which took place in the past and was written in the prior year of financial statement , net of the income taxes , is known as a prior period adjustment .

It is the method to fix the previous problem of past during the reporting .

hence , the correct term fro the given statement is a prior period adjustment .

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3 years ago

What is the weighted average cost of capital and it's purpose?

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The purpose of this financial measurement would be for the budgeting process. It can be used to estimate future cash outflow that the company made for the operating period.</span>

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3 years ago

The president of the Northwoods University student body made a formal request to the IT department for additional computers in t

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Because of the formal request made, the President of the University is the:

A. initiator

<h3>Who is an Initiator? </h3>

This refers to a person who makes the first offer for a thing or starts off negotiations or requests.

With this in mind and from the given question, we can see that because the president of the University made the formal request for additional computers, then he is the initiator.