Question

Assume the NPV for a machine's total cost over 10 years is -$5,000. If the discount...

Assume the NPV for a machine's total cost over 10 years is -$5,000. If the discount rate is 8%, what will be the equivalent annual cost (EAC) in this case?

Group of answer choices

-$1,252.28

-$745.15

-$813.73

Homework Answers

Answer #1

NPV for machine total cost over 10 years is -$5000

Calculating equivalent annual cost (EAC) in this case:-

where, NPV = -$5000

r = discount rate = 8%

n = no of years = 10 years

EAC = -$745.15

Option 2

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