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

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

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

If you need any clarification, you can ask in comments.    

If you like my answer, then please up-vote as it will be motivating       

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume the NPV for a machine's total cost over 8 years is -$5,000. If the discount...
Assume the NPV for a machine's total cost over 8 years is -$5,000. If the discount rate is 12%, what will be the equivalent annual cost (EAC) in this case? Group of answer choices A) -$937.22 B) -$1,006.51 C) -$1,387.05
Assume an equipment costs $396,000 and lasts five years before it is replaced. The operating cost...
Assume an equipment costs $396,000 and lasts five years before it is replaced. The operating cost is $60,500 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 12.5 percent? (Hint: Find the NPV of machine cost and annual cost, then estimate the EAC)
The NPV of a project decreases with discount rate r. When r=10%, NPV=$10 million; when r=11%,...
The NPV of a project decreases with discount rate r. When r=10%, NPV=$10 million; when r=11%, NPV= -$5 million. The IRR of this project must be ________. Group of answer choices a. Above 11%. b. Below 10%. c. Not enough information. d. Between 10% and 11%.
Assume project cost is $25,000 with cash flows of $8,000/yr for 5 years; WACC = 10%....
Assume project cost is $25,000 with cash flows of $8,000/yr for 5 years; WACC = 10%. What is the project's NPV? Group of answer choices $2,945 $5,326 $7,235 $3,887
Assume a machine costs $108,000 and lasts six years before it is replaced. The operating cost...
Assume a machine costs $108,000 and lasts six years before it is replaced. The operating cost is $17,200 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 15 percent? (Hint: the EAC should account for both initial investment and annual operating costs)
Assume a machine costs $1,230,000 and lasts six years before it is replaced. The operating cost...
Assume a machine costs $1,230,000 and lasts six years before it is replaced. The operating cost is $74,500 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 13 percent? (Hint: the EAC should account for both initial investment and annual operating costs) $382,188.48 $376,410.27 $364,294.60 $357,412.78 $301,416.83
Assume a machine costs $108,000 and lasts seven years before it is replaced. The operating cost...
Assume a machine costs $108,000 and lasts seven years before it is replaced. The operating cost is $17,600 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 14 percent? (Hint: the EAC should account for both initial investment and annual operating costs) $33,218.72 $35,610.58 $38,127.49 $42,784.78 $46,412.03
Assume a machine costs $1,530,000 and lasts eight years before it is replaced. The operating cost...
Assume a machine costs $1,530,000 and lasts eight years before it is replaced. The operating cost is $115,000 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 16 percent? (Hint: the EAC should account for both initial investment and annual operating costs) $467,243.12 $485,642.76 $509,748.77 $526,411.32 $543,577.98
3. What is the NPV of a project that costs $15,000 today and another $5,000 in...
3. What is the NPV of a project that costs $15,000 today and another $5,000 in one year, and is then expected to generate 13 annual cash inflows of $2,000 starting at the end of year 5. Cost of capital is 8%. Round to the nearest cent. ​[Hint: There are two outflows here, today and year 1. You will need to discount the year 1 cost at the project's discount rate when calculating PV(outflows).]
If the interest rate is 8%, what is the Equivalent Annual Cost (EAC) of the following...
If the interest rate is 8%, what is the Equivalent Annual Cost (EAC) of the following machine: Cost: $8,000 Life: 5 years Annual cost to operate: $2,000 Answer to 2 decimal places, for example 970.12
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT