Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 14. equivalent annual annuities another method to

14. Equivalent annual annuities Another method to deal with the unequal life problem of projects...

60.1K

Verified Solution

Question

Finance

image
14. Equivalent annual annuities Another method to deal with the unequal life problem of projects is the equivalent annual annuity (EAA) method. In this method the annual cash flows under the alternative investments are converted into a constant cash flow stream whose NPV is equivalent to the NPV of the comparative project's initial stream. Consider the case of Cold Duck Manufacturing Company: Cold Duck Manufacturing Company is considering a four-year project that has a weighted average cost of capital of 11% and a net present value (NPV) of $75,682. Cold Duck Manufacturing Company can replicate this project indefinitely What is the equivalent annual annuity (EAA) for this project? $24,394 $25,614 $26,833 $29,273 An analyst will need to use the FAA approach to evaluate projects with unequal lives when the projects are

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Discuss active bond portfolio management. Given an inefficient market, is such portfolio management appropriate? Explain one active...

Finance
Q

an investor is evaluating the common shares od the three firms A,B and C. Expected returns,...

Finance
Q

1. What are discrepancies between calf intestinal mucosa alkaline phosphatase and human alkaline phosphatase? 2. A solution...

Biology
Q

You are in charge of the national Unicorn breeding program. Unicorns can have either swirled or...

Biology
Q

owing equation represents a hyperbola Fut the equation in to standard for Standard form of...

Geometry
Q

Suppose that a box contains 8 cameras and that 5 of them are defective. A...

Basic Math
Q

The National Center of Education Statistics conducted a survey of high school seniors collecting test...

Statistics
Q

6 Sam spent 30 minutes studying for his Math test 15 minutes studying for a...

Algebra
Q

Units Sold to Break Even, Unit Variable Cost,...

Accounting
Q

1. GikSmile Inc. and FunG Co. made exchange of assets with no commercial substance. GikSmile...

Accounting
Q

Under GAAP, which of the following would affect the net income but would not affect...

Accounting
Q

On January 1, 2023, Pantop Corporation acquired 85% of the outstanding common stock of Song...

Accounting