6) What is the Equivalent Annual Cost (EAC) for each of the two options for which the annual cash flows are listed below? (Note: when calculating EAC, you should treat negative cash flows as positive values, and positive cash flows as negative values.) Use i=5%. Option 2 -$50,000 Year Option 1 -$25,000 1 -$3,000 -$7,000 2 -$3,000 -$7,000 3 -$6,000 -$7,000 4 -$6,000 -$8,000 -$6,000 -$8,000 6 -$9,000 -$8,000 -$9,000 -$9,000 8 -$9,000 -$9,000 9. -$9,000 -$9,000 10 $5,000 $9,000
6) What is the Equivalent Annual Cost (EAC) for each of the two options for which the annual cash flows are listed below? (Note: when calculating EAC, you should treat negative cash flows as positive values, and positive cash flows as negative values.) Use i=5%. Option 2 -$50,000 Year Option 1 -$25,000 1 -$3,000 -$7,000 2 -$3,000 -$7,000 3 -$6,000 -$7,000 4 -$6,000 -$8,000 -$6,000 -$8,000 6 -$9,000 -$8,000 -$9,000 -$9,000 8 -$9,000 -$9,000 9. -$9,000 -$9,000 10 $5,000 $9,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:6) What is the Equivalent Annual Cost (EAC) for each of the two options for which the annual
cash flows are listed below? (Note: when calculating EAC, you should treat negative cash
flows as positive values, and positive cash flows as negative values.) Use i=5%.
Year
Option 1
Option 2
-$25,000
-$50,000
1
-$3,000
-$7,000
-$7,000
-$7,000
2
-$3,000
3
-$6,000
4
-$6,000
-$8,000
-$6,000
-$8,000
-$8,000
-$9,000
-$9,000
-$9,000
-$9,000
-$9,000
8
-$9,000
9
-$9,000
10
$5,000
$9,000
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