Asked by
Jordan Johnson
on Oct 10, 2024
Verified
The salvage value of new equipment should not be considered when using the internal rate of return method to evaluate a project.
Salvage Value
The estimated value that an asset will realize upon its sale at the end of its useful life.
Internal Rate
The rate of return that makes the net present value of all cash flows from a particular project equal to zero.
- Recognize the role and treatment of salvage value in investment evaluation.
- Discern the assumptions underlying the net present value and internal rate of return methods.
Verified Answer
EG
Learning Objectives
- Recognize the role and treatment of salvage value in investment evaluation.
- Discern the assumptions underlying the net present value and internal rate of return methods.
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