Answer:
c. $310,450
Explanation:
The computation of the capitalized cost of the income is shown below:
= Present value of the annual cash flow × discount factor for 10 years at 5%
where,
Present value of the annual cash flow = $50,000 ÷ 0.10 = $500,000
And, the discount factor is
= 1 ÷ (1 + rate) ^ years
= 1 ÷ (1.10)^5
= 0.6209
So, the capitalized cost of the income is
= $500,000 × 0.6209
= $310,450
