An automaton asset with a high first cost of $10 million has required capital re

Question

An automaton asset with a high first cost of $10 million has required capital recovery (CR) of $1.985.000 per year. The correct interpretation of this CR value is that Multiple Choice each year of its expected life, a net revenue of $1,985,000 must be realized to recover the $10 million first cost and the required rate of return on this investment each year of its expected life, a net revenue of $1985,000 must be realized to recover the $10 million first cost the services provided by the asset will stop if less than $1.985,000 in net revenue is reported in any year the owner must pay an additional $1,985,000 cach year to retain the asset

Explanation / Answer

Correct Answer:

Each year of its expected life, a net revenue of $1,985,000 must be realized to recover the $10 million first cost

Explanation:

Capital recovery is the value to be earned to recover the initial investment. In the given case, it is net revenue of $1,985,000 each to recover the investment. Afterwards, the company will earn any profit.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.