Question

Compute the EUAC for these cash flows. 0 1 2 3 4 5

i = 15% 100 100

Answer 1

As per the question given its difficult to understand the cash flows and the number of years. As I understand the cash flow at the 0th year is 100, and the annual uniform cash inflows are 100 per year for 5 year. We need to calculate equal uniform annual cost.

Present worth of the cash flow= - 100 + 100(P/A, 15%,5)

NPW= -100 + 100(3.352)= 235.2

EUAC= NPW(A/P, I, n)

EUAC = 235.2(A/P, 15%, 5)

EUAC =235.2(.2983)=70.16

Alternative answer

Convert the investment at the zeroth (100) to annual investment by applying (A/P,I,n) factor

Annual investment= -100(A/P, 15%, 5) = -100(. 2983) = -29.83

EUAC = - ANNUAL INVESTMENT+ANNUAL REVENUE

EAUC = -29.83+100= 70.17