Question

QUESTION 49 In terms of revenues and costs for a project, which of the statements below is FALSE? O Estimates of revenues and costs begin with sales forecasts and the production costs associated with the sales forecast. Projected revenues and costs are estimates of future activity O Estimates of revenues and costs begin with operating cash flow of the project Projected revenues and costs for the basis of the potential for a project's acceptance or rejection QUESTION 50 A firm is considering purchasing two assets. Asset A will have a useful life of 12 years and cost $3 million, it will have installation costs of $400,000 and a salvage or residual value of $400,000. Asset B will have a useful life of 8 years and cost $2.5 million, it will have installation costs of $300,000 and a salvage or residual value of $800,000. Which asset will have a greater annual straight-line depreciation? Asset A has $30,000 more in depreciation per year Asset A has $37.500 more in depreciation per year Assot B has $30,000 more in depreciation per year The depreciation per year is the same for each asset

Answer 1

The incorrect statement is

Estimation of revenues and costs begin with operating cash flow of the project. Operating cash flow is calculated form sales and expenses

Rest all are true

Annual straight line depreciation =(cost of asset +installation cost - residual value)/number of years

Asset A =(3000,000+400,000-400,000)/12

=$250,000

Asset B =(2,500,000+300,000-800,000)/8

=$250,000

The depreciation per year is same for each asset