An automation asset with a high first cost of $10 million has a capital recovery (CR) of $1,985,000 per year. The correct interpretation of this CRvalue is that:a. the owner must pay an additional $1,985,000 each year to retain the asset.b. 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 ofreturn on this investment.c. each year of its expected life, a net revenue of $1,985,000 must be realized to recover the $10 million first cost.d. the services provided by the asset will stop if less than $1,985,000 in net revenue is reported in any year.

An automation asset with a high first cost of $10 million has a capital recovery (CR) of $1,985,000 per year. The correct interpretation of this CRvalue is that:a. the owner must pay an additional $1,985,000 each year to retain the asset.b. 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 ofreturn on this investment.c. each year of its expected life, a net revenue of $1,985,000 must be realized to recover the $10 million first cost.d. the services provided by the asset will stop if less than $1,985,000 in net revenue is reported in any year.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 17P

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