The lessor’s initial direct costs often are substantial. What are initial direct costs?

Q: Define the term capitalized cost?

A: A Capitalized Cost is the cost incurred in the purchase and financing of fixed assets. It includes…

Q: What are the Nonmanufacturing costs?

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: “Sunk costs are easy to spot—they’re the fixed costs associated with a decision.” Do you agree?…

A: The Sunk cost is a cost which has been incurred in the past and cannot be recovered and revoked back…

Q: state the limitations of the payback pe

A: Answer : The payback period is the quantity of time needed for cash inflows generated by a project…

Q: There can be no differential costs if the expenses are fixed. Is that what you're saying? Explain.

A: Variable and differential costs: What are they used for, and what do they mean: When two options…

Q: How can the WACC be both an average cost and a marginal cost?

A: Weighted average cost of capital is the aggregated cost of capital with respect to the weights or…

Q: How do managers decide whether a cost is adirect or an indirect cost?

A: Cost refers to the amount of money incurred for acquiring a product or manufacturing a product. Cost…

Q: How do managers decide whether a cost is avariable or a fixed cost?

A: Cost refers to the amount of money incurred for acquiring a product or manufacturing a product. Cost…

Q: What is the economic rationale for the cost approach? Under what conditions would the cost approach…

A: Answer: Economic rationale for cost approach: The cost approach means that the person who is…

Q: In general terms, how would a change ininvestment opportunities affect the payoutratio under the…

A: Answer: In the residual dividend policy, the distribution is calculated after the company’s spending…

Q: If a firm's current revenues are less than its current variable costs. Explain.

A: Revenues are the amount received from sale of goods and services in the business. Variable costs are…

Q: Which of the following is an opportunity cost? marginal cost cost of sales O lost sales cost of…

A: Introduction: Opportunity cost: Cost for the opportunity lost called Opportunity cost.

Q: Which of these costs is considered as the most important cost because if it is not met, an…

A: A company income statement will report the net income as the total revenue in excess of the total…

Q: What is the relevant range? How does fixed costs and variable costs behave outside the relevant…

A: Relevant range refers to the level of the activity which represents the maximum and minimum limits…

Q: Which of the following statement is correct for relevant costs? a. It is avoidable, future and…

A: Relevant cost are those costs which are relevant for decision making. A cost is judged to be…

Q: The benefit lost when choosing one option precludes receiving the benefits from an alternative…

A: Cost :— The two basic type of Cost incurred by Businesses are Fixed and Variable. Variable Cost…

Q: According to our authors, explain the concept of “lower-of-cost-or-market.”

A: When a company prepares its financial statement, it reports certain items in the financial statement…

Q: What does it mean to externalize costs?

A: Externalizing costs means generating profits by reducing the indirect costs by imposing them on…

Q: What costs must gross profit cover for Superior Construction? The gross profit must cover these…

A: Gross Profit: Gross profit is the amount of money a company earns after deducting all of the…

Q: Calculate cost base, and capital gain (Loss), and capital gain tax, i

A: Capital gain/loss are the profits or rains arising from the transfer of a capital asset. It is the…

Q: With example, explain the difference between induced and indirect economic impact.

A: Answer:- Economic impact definition:- An economic impact study investigates the effects of a certain…

Q: The marginal cost of an asset is equivalent to its EUAC. True or False?

A: Marginal Cost of Asset means the cost required to run the asset for the next period. EUAC =…

Q: How should changes in the estimated unguaranteedresidual value be handled by the lessor?

A:

Q: Explain why sunk costs are not considered in the analysis ofinvestment alternatives.

A: A sunk cost is also known as the retrospective cost, is a cost that cannot be recovered because it…

Q: Explain Amortised cost and how to calculate it.

A: Amortized cost refers to the cost that helps to allocate the cost of financial/intangible assets…

Q: If fixed costs increase, what would be the impact on the (a) contribution margin?

A: Fixed cost means the cost which do not vary with the level of output where as variable cost will…

Q: “In CVP analysis, gross margin is a less-useful concept than contribution margin.” Do you agree?…

A: Contribution Margin:Contribution margin is the excess of selling price over the variable costs of a…

Q: In what sense is the WACC an average cost? A marginal cost?

A: Weighted average cost of capital is the firm's cost of capital which is based on proportion of each…

Q: What is the financial advantage (disadvantage) of further processing the intermediateproduct?

A: Further Processing means carrying the production of goods to another level and shifting its…

Q: Which of the following costs are irrelevant to business decisions? a. Avoidable costs b. Costs that…

A: Irrelevant cost: Irrelevant cost does not affect the decision making since they are not in the…

Q: What are the shortcomings of the payback period?

A: Payback period: The payback period assesses the time period required to recover the initial…

Q: How does the residual income approach overcome this problem?

A: Definition: ROI: It is a measure of the amount of return on a particular investment with respect to…

Q: hould the costs be historical (embedded)costs or new (marginal) costs?

A: Historical cost is the original cost at which an asset was purchased by corporation and used in the…

Q: What are the repercussions of taking profit before the contracting company's obligations have…

A: Financial obligations are the obligations, which are referred to as the responsibility of an…