Question

A 7-year project has an initial fixed asset investment of $16,380, an initial NWC investment of...

A 7-year project has an initial fixed asset investment of $16,380, an initial NWC investment of $1,560, and an annual OCF of -$24,960. The fixed asset is fully depreciated over the life of the project and has no salvage value. Required: If the required return is 8 percent, what is the project's equivalent annual cost, or EAC? (Do not round your intermediate calculations.)

a. $-23,996.30

b. $-20,997.25

c. $-29,642.49

d. $-26,819.40

e. $-28,230.95

Homework Answers

Answer #1

Correct answer: e. $-28,230.95

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

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