Five-year project has an initial fixed asset investment

Assignment Help Financial Management

Reference no: EM13885421

A five-year project has an initial fixed asset investment of $335,000, an initial NWC investment of $35,000, and an annual OCF of −$34,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is this project’s equivalent annual cost, or EAC? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

Reference no: EM13885421

Questions Cloud

Uses straight-line depreciation to a zero book value : Kurt's Kabinets is looking at a project that will require $80,000 in fixed assets and another $20,000 in net working capital. The project is expected to produce sales of $110,000 with associated costs of $70,000. The project has a 4-year life. The co..

Project to improve its production efficiency : Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $490,000 is estimated to result in $200,000 in annual pretax cost savings

Compute the probability that the bank will fail : Suppose a bank has 100 million dollars of assets to invest. It can either invest in risky or safe loans. Safe loans will be worth $105 M in one year with certainty. Risky loans will be worth either $70 M or $130 M in one year, each with equal probabi..

About the payment liability : Which of the following is a payment liability?

Five-year project has an initial fixed asset investment : A five-year project has an initial fixed asset investment of $335,000, an initial NWC investment of $35,000, and an annual OCF of −$34,000. The fixed asset is fully depreciated over the life of the project and has no salvage value.

What is juniors weighted average cost of capital : Junior Interiors market value capital structure of 62% Common Equity, 3% Preferred Stock (PS) and 35% Debt. The company does not pay dividends, and evaluates its operations as approximately 30% more risky than an “average” company in the industry. Wh..

What is your recommendation to town council of cedar falls : The town of Cedar Falls has decided to lease their parking meters for 10 years to a private company in order to raise revenue for some much needed road repairs. Cedar Falls' mayor informs you that she wants the deal with greatest Net Present Value (N..

Some additional land and build a new factory : Winston Enterprises would like to buy some additional land and build a new factory. The anticipated total cost is $136 million. The owner of the firm is quite conservative and will only do this when the company has sufficient funds to pay cash for th..

What is the implied rate of return on this stock : A stock will pay a dividend of $4 at the end of the year. It sells today for $100 and is expected to sell in one year for $105. What is the implied rate of return on this stock?

User Account

All Pages