The proposed purchase price of an asset should be compared to the present value of the benefits it will generate over its useful life.

Question

Quizplus · Accepted Answer

This statement is true. The present value of the benefits an asset will generate over its useful life should be greater than or equal to its purchase price in order for it to be a wise investment. This comparison can be done using various financial analysis tools such as net present value (NPV) or internal rate of return (IRR).

The Proposed Purchase Price of an Asset Should Be Compared