Question

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm’s production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $24,784.00 per year for 8 years and costs $104,094.00. The UGA-3000 produces incremental cash flows of $28,017.00 per year for 9 years and cost $123,395.00. The firm’s WACC is 9.54%. What is the equivalent annual annuity of the UGA-3000? Assume that there are no taxes.

Answer #1

equivalent annual annuity (EAA) = (r * NPV)/(1 - (1+r)^(-n))

Where:

**r –** Project discount rate (WACC)

**NPV** – The net present value of project cash
flows

**n** – project life (in years)

For UGA-3000

r = 9.54%

UGA-3000 | ||

Year | Cashflow | PV of cashflow |

0 | -1,23,395.00 | -1,23,395.00 |

1 | 28,017.00 | 25,576.96 |

2 | 28,017.00 | 23,349.42 |

3 | 28,017.00 | 21,315.89 |

4 | 28,017.00 | 19,459.46 |

5 | 28,017.00 | 17,764.70 |

6 | 28,017.00 | 16,217.55 |

7 | 28,017.00 | 14,805.14 |

8 | 28,017.00 | 13,515.74 |

9 | 28,017.00 | 12,338.63 |

NPV |
40,948.48 |

**EAA = (9.54% * 40,948.48 )/ (1 - 1.0954^-9)**

**= $6,980.83**

**Drop a thumbs up if this helped :)**

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both
machines make the firm’s production process more efficient which in
turn increases incremental cash flows. The GSU-3300 produces
incremental cash flows of $25,572.00 per year for 8 years and costs
$104,003.00. The UGA-3000 produces incremental cash flows of
$28,091.00 per year for 9 years and cost $123,535.00. The firm’s
WACC is 8.49%. What is the equivalent annual annuity of the
GSU-3300? Assume that there are no taxes.

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both
machines make the firm’s production process more efficient which in
turn increases incremental cash flows. The GSU-3300 produces
incremental cash flows of $26,069.00 per year for 8 years and costs
$99,218.00. The UGA-3000 produces incremental cash flows of
$28,549.00 per year for 9 years and cost $123,520.00. The firm’s
WACC is 7.77%. What is the equivalent annual annuity of the
GSU-3300? Assume that there are no taxes.

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both
machines make the firm’s production process more efficient which in
turn increases incremental cash flows. The GSU-3300 produces
incremental cash flows of $24,476.00 per year for 8 years and costs
$99,595.00. The UGA-3000 produces incremental cash flows of
$29,567.00 per year for 9 years and cost $123,688.00. The firm’s
WACC is 7.70%. What is the equivalent annual annuity of the
GSU-3300? Assume that there are no taxes.

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both
machines make the firm’s production process more efficient which in
turn increases incremental cash flows. The GSU-3300 produces
incremental cash flows of $26,584.00 per year for 8 years and costs
$103,548.00. The UGA-3000 produces incremental cash flows of
$28,630.00 per year for 9 years and cost $125,485.00. The firm’s
WACC is 7.62%. What is the equivalent annual annuity of the
GSU-3300? Assume that there are no taxes.

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both
machines make the firm’s production process more efficient which in
turn increases incremental cash flows. The GSU-3300 produces
incremental cash flows of $24,967.00 per year for 8 years and costs
$103,481.00. The UGA-3000 produces incremental cash flows of
$29,068.00 per year for 9 years and cost $123,149.00. The firm’s
WACC is 7.12%. What is the equivalent annual annuity of the
GSU-3300? Assume that there are no taxes.

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both
machines make the firm’s production process more efficient which in
turn increases incremental cash flows. The GSU-3300 produces
incremental cash flows of $25,761.00 per year for 8 years and costs
$101,081.00. The UGA-3000 produces incremental cash flows of
$29,426.00 per year for 9 years and cost $124,025.00. The firm’s
WACC is 9.34%. What is the equivalent annual annuity of the
GSU-3300? Assume that there are no taxes.

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both
machines make the firm’s production process more efficient which in
turn increases incremental cash flows. The GSU-3300 produces
incremental cash flows of $26,721.00 per year for 8 years and costs
$102,710.00. The UGA-3000 produces incremental cash flows of
$27,900.00 per year for 9 years and cost $123,085.00. The firm’s
WACC is 7.63%. What is the equivalent annual annuity of the
GSU-3300? Assume that there are no taxes....

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both
machines make the firm’s production process more efficient which in
turn increases incremental cash flows. The GSU-3300 produces
incremental cash flows of $25,017.00 per year for 8 years and costs
$103,271.00. The UGA-3000 produces incremental cash flows of
$27,017.00 per year for 9 years and cost $126,508.00. The firm’s
WACC is 9.02%. What is the equivalent annual annuity of the
UGA-3000? Assume that there are no taxes.

1A.
Jose's firm must choose to buy the GSU-3300 or the UGA-3000.
Both machines make the firm’s production process more efficient
which in turn increases incremental cash flows. The GSU-3300
produces incremental cash flows of $25,225.00 per year for 8 years
and costs $101,274.00. The UGA-3000 produces incremental cash flows
of $28,342.00 per year for 9 years and cost $126,395.00. The firm’s
WACC is 7.43%. What is the equivalent annual annuity of the
GSU-3300? Assume that there are no taxes....

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both
machines make the firm’s production process more efficient which in
turn increases incremental cash flows. The GSU-3300 produces
incremental cash flows of $26,826.00 per year for 8 years and costs
$99,019.00. The UGA-3000 produces incremental cash flows of
$29,067.00 per year for 9 years and cost $123,381.00. The firm’s
WACC is 7.47%. What is the equivalent annual annuity of the
GSU-3300? Assume that there are no taxes....

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 9 minutes ago

asked 15 minutes ago

asked 39 minutes ago

asked 44 minutes ago

asked 51 minutes ago

asked 52 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago