Question

Inez and Sofia opened a clothing store franchise after securing a $25,000 franchise license. After their license expires, it won’t be worth anything unless they choose to renew.

Inez lists the first year’s amortization expense of the franchise agreement as $833. How long will the franchise agreement be valid before it expires?

A. 15 years

B. 25 years

C. 30 years

D. 32 years

E. 35 years

Answer 1

C. 30 years

Step-by-step explanation:

Validity = (Franchise licence fee / amortization amount) yrs

Vadility = $25000/$833 yrs

Vadility = 30 yrs

Therefore, it would last for 30 years