A five-year project has an initial fixed asset investment of $265,000, an initial NWC investment of $21,000, and an annual OCF of -$20,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 12 percent, what is this project's equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Equivalent annual cost
A five-year project has an initial fixed asset investment of $265,000, an initial NWC investment of $21,000, and an annual OCF of -$20,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 12 percent, what is this project's equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Equivalent annual cost
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:A five-year project has an initial fixed asset investment of $265,000, an initial NWC
investment of $21,000, and an annual OCF of -$20,000. The fixed asset is fully
depreciated over the life of the project and has no salvage value. If the required return is
12 percent, what is this project's equivalent annual cost, or EAC? (A negative
answer should be indicated by a minus sign. Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)
Equivalent annual cost
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