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Are these added to the initial cost
Course:- Managerial Accounting
Reference No.:- EM131453762




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Question:

When you calculate net present value do you add on costs associated with the initial purchase? For example, the item costs $6M but there is a delivery fee of 6K and installation charges of 4K.

Are these added to the initial cost? Likewise, the item has annual operating revenue of 2M but also incurs 400K in operating expenses, annual fee of 5K for environmental impact.

Are these deducted from annual revenue? Finally, if an items will require $35K in initial training, is that added to initial cost? And if training will again have to happen in year 3, does this get deducted from revenue in year 3?




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