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Straight line depreciation over the life of the project

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Project A has an NPV of 200000. The project is financed by borrowing at 7%pa. The cost of capital for Project A is 0.11. This rate is expressed as a decimal, e.g. so that .12 is equal to 12%. The project has 6 year life. Calculate the Annual Equivalent (AE). Your textbook calls this EAV, Equivalent Annual Value. Calculate to the nearest dollar.

Given the following information calculate the Accounting Rate of Return (ARR gross).

Outlay = 200000

Annual Cash Flow = 60000 per year over four years

Life = 4 years

Rate = 0.11, as a decimal

Assume no taxes. Your answer must be accurate to the nearest percentage. Enter your answer as a percentage. Enter the % symbol e.g. 17% Note: do not leave a space before the percentage (%) symbol. Use straight line depreciation over the life of the project.

Reference no: EM131628170

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