Project A has a construction cost of $125,000 and an annual maintenance cost of $275,900. Project...
Question:
Project A has a construction cost of $125,000 and an annual maintenance cost of $275,900. Project B has a construction cost of $150,000 and an annual maintenance cost of $262,000. If both projects are expected to last forever and the interest rate is 9%, what is the capitalized cost of the project that should be selected?
a. $3,061,111
b. $2,980,675
c. $3,597,026
Capitalized Cost
The cost which is not recorded at the time of purchase but recorded over a period of time is termed as capitalized cost. For example, depreciation is a capitalized cost on the purchase of the fixed asset.
Answer and Explanation: 1
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View this answerThe correct option is a, $3,061,111
Information given in the question is as follows:
- Project A
Construction cost is $125,000
An annual maintenance...
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Comparing the Effects of Capitalizing & Expensing
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Expensing and capitalizing are methods for recording a company's financial statements. In this lesson, learn to distinguish between capitalizing and expensing, and recognize when to do each.
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