The capital budget for the year is approved by a companys. Cost of asset c. Salvage value d. Book value e. Appraisal of asset f. Useful life, In determining whether a gain resulting from a disposition of an asset is capital or business, various criteria have been used. What is the payback period for this equipment? Consumer perception and reputation of the company in the market are the core elements for the success of any company. a. Adding a dollar sign may make stakeholders more willing to take intangible benefits seriously. Correct! Capital budgeting, which is also known as investment appraisal, is a process of evaluating the costs and benefits of potential large-scale projects for your business. Correct! a) Whether the transaction resulted in a g, An item is considered material if a. it doesn't costs a lot of money. a. Future investment decisions are improved because managers will improve their estimating skills through repeated efforts. flashcard sets. All other trademarks and copyrights are the property of their respective owners. d. might consist of operating cost savings. a. Intangible benefits are marked by their non-physicality and their distinctness from other benefits. Using the company's 10% discount rate, the net present value of the cash flows associated with just the tangible costs and . Quantified intangible benefits can then be used for accounting purposes, similar to how buildings and equipment are valued. Customers benefit if a new IT project improves the user experience. b. d. The IRR on this project cannot be approximated. Tangible benefits are quantifiable in some way, such as in dollars saved, hours worked, or other metrics that may be quantified as a result of an improvement initiative, and are also called quantifiable outcomes. To unlock this lesson you must be a Study.com Member. In this context, he observed that while valuing the intangible assets, which includes customer contracts, the Valuer has valued it for a period of 2 years and 4 months by taking the earnings before interest and taxed for 2010, 2011 and 2012 separately and thereafter discounted at the rate of 19.20%, which resulted in value of customer contract at c. salvage value. The cash payback period is computed by dividing the: c. cost of the investment by the net annual cash inflow. For instance, in the budget, new equipment may be justified if employee satisfaction is considered. Net present value. Which of the following is a cost associated with dropping a business agreement? This option would therefore be quantifiably less appealing than investing the same amount of money in a new product return policy that has a 50-percent chance of improving customer satisfaction to the same target level. The clearest and unbiased basis for cost allocation exists when which one of the following can be determined? Discuss the importance of computation of the contribution margin in evaluating the relationship of cost, volume, and profit. He's also run a couple of small businesses of his own. Select one: B. include increased quality or employee loyalty. 2 1.783 1.759 1.736 b) include increased quality or employee loyalty. System Analyst Roles & Responsibilities | What is a System Analyst? b. From the view of a user of financial statements, describe objections to using historical cost as the basis for valuing tangible assets. c. neutrality. The machine is expected to generate net income of $8,000 each year. b. include increased quality or employee loyalty. When the image of the brand is well spoken as being a loyal effective business, the company benefits. b. include increased quality or employee loyalty. Click here to get an answer to your question In capital budgeting, intangible benefits should be excluded entirely.

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