Equivalent annual receipts equal the equivalent annual

Assignment Help Financial Management

Reference no: EM131561930

Consider the cash flows for the following two projects:

n A B

0 -$15,000 -$20,000

1 $3,000 $2,600

2 $X $6,400

3 $3,000 $9,150

4 $3,000 $12,100

5 $3,000 $13,120

(a) For project A, find the value of X that makes the equivalent annual receipts equal the equivalent annual disbursement at i=8%

(b) Would you accept project B at i=10% based on AE criterion?

Reference no: EM131561930

Questions Cloud

Steven have earned in interest after one year : Steven recently won $1 in the scratch-n-play lotto. How much money will Steven have earned in interest after one year?

Lessor recover to break even in perfect market with no risk : What residual value must the lessor recover to break even in a perfect market with no risk?

Required equal payment to retire the loan in eight years : What is the required equal payment to retire the loan in eight years?

Funds available under pledging and under factoring : What is the effective interest rate and the average amount of funds available under pledging and under factoring?

Equivalent annual receipts equal the equivalent annual : For project A, find the value of X that makes the equivalent annual receipts equal the equivalent annual disbursement at i=8%

What is yield to maturity of this bond : What is the yield to maturity of this bond?

Each payment is split between interest-sinking fund deposit : Each payment is split between interest and a sinking fund deposit. Interest on the loan charged at 8% annual effective rate.

What is the ownership cost of the vehicle over four years : If his interest rate is 5% compounded annually, what is the ownership cost of the vehicle over 4 years? 8 years?

Assuming the same annual effective interest rate : Assuming the same annual effective interest rate, the two present values are equal.

User Account

All Pages