Explanation

Extending the project life may Increase IRR, depending on cash flow patterns.

If the additional years generate significant positive cash flows.

The IRR may increase, indicating higher profitability.

Explanation

COGS (Cost of Goods Sold) is reported on the Income Statement.

It is also known as the Profit and Loss (P&L) statement.

The Income Statement shows the revenues, expenses, and net income of a business over a specific period, such as a month, quarter, or year.

Explanation

The basic formula for simple interest is: Principal x Rate x Time

This formula calculates the interest earned or paid on a principal amount over a specific period of time.

Explanation

NPV is not directly affected by the depreciation method.

As it focuses on cash inflows and outflows, not accounting profits or losses.

Explanation

A zero NPV indicates a breakeven point.

It means that the project's expected returns equal the costs.

The investment is expected to neither generate a profit nor incur a loss.

Explanation

Using the formula for simple interest, I = P x R x T, where P = $2,000, R = 5% = 0.05, and T = 4 years, we get:

I = $2,000 x 0.05 x 4 = $400

Adding the interest to the principal, we get:

$2,000 + $400 = $2,400

So, the total amount accumulated is $2,400.

Explanation

After the first year, the interest earned is $500 x 6% = $30, making the total amount $500 + $30 = $530.

In the second year, the interest is calculated on the new principal balance of $530, resulting in $530 x 6% = $31.80.

Adding this interest to the principal, we get $530 + $31.80 = $561.80.

Explanation

Internal Rate of Return (IRR) is often compared with NPV for project evaluation.

As both methods assess a project's financial viability.

Explanation

IRR is preferred over NPV for some decisions.

Because it's easier to understand and provides a clear rate of return.

This making it more intuitive for decision-makers.

Explanation

An understatement of beginning inventory understates COGS.

As it reduces the starting point for calculating COGS, resulting in fewer costs being included.

This leads to artificially low COGS, overstating Gross Profit and Net Income.