Ask Question
BusinessBusiness
11 December, 18:31

What is the effect on NPV of an asset if the salvage value is ignored? A) NPV would be understated. B) No effect C) NPV would be overstated. D) It depends on the cost of the asset being considered for investment.

+3
Answers (1)
  1. 11 December, 18:38
    0
    The correct answer is A) NPV would be understated.

    Explanation:

    NPV is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

    The Salvage value is added at the end of the cash flow. So is a cash inflow.

    And if we ignore salvage value the difference, the cash inflows will be smaller, so the NPV would be understated.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “What is the effect on NPV of an asset if the salvage value is ignored? A) NPV would be understated. B) No effect C) NPV would be ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Statco, Inc., has struggled to meet projected revenues for each of the past ten quarters. The firm hired Mark Adams to design a control system and offer suggestions to improve the firm's performance.
Answers (1)
Bob is measuring the GDP in 2018 by using the quantity of each final good and service produced in 2018, multiplied by the price at which the goods and services were sold in 2018. What type of calculation is Bob creating?
Answers (1)
The end goal of the Executive order is to provide what to the patients
Answers (1)
What is business etiquette
Answers (2)
2. Prepare a multiple-step income statement for Armstrong Co. from the following data for the year ended December 31.
Answers (1)
New Questions in Business
Sweet Cream is an ice cream manufacturer. It sells Guilt-Free, a zero-calorie ice cream, which competes with Flavor Bell's Moo Sweet, a low-calorie ice cream. Flavor Bell reduces Moo Sweet's prices to match Guilt-Free's prices.
Answers (1)
Which of the following is NOT considered to be one of the three primary functions that all organizations perform? A. finance/accounting B. research and development C. production/operations D. marketing
Answers (1)
If someone pays medical expenses directly to the provider, such as a doctor or hospital, what percentage of the gift is exempt from gift tax?
Answers (1)
All else equal, active retention is a good option for firms: a. That have highly liquid assets b. That do not have a lot of debt c. Whose losses are predictable d. all of the above e. none of the above
Answers (1)
Sheffield Company purchases $50,300 of raw materials on account, and it incurs $63,900 of factory labor costs.
Answers (1)
Home » Business » What is the effect on NPV of an asset if the salvage value is ignored? A) NPV would be understated. B) No effect C) NPV would be overstated. D) It depends on the cost of the asset being considered for investment.
Sign Up Forgot Password?