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EQUIVALENT ANNUAL ANNUITIES
1. Black Sheep broadcasting is considering a five year-project that has a weighted average cost of capital of 14% and a net present value (NPV) of $80,720. Black sheep broadcasting can replicate this project indefinitely.
What is the equivalent annual annuity (EAA) for this project?
a. $23.512
b. $21.161
c. $24.688
d. $27,039
2. An analyst will need to use the EAA approach to evaluate projects with unequal live when the projects are ________.
a. Mutually exclusive OR
b. Independent
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What interest rate would make it worthwhile to incur a compensating balance of $20,000 in order to get a 1 percent lower interest rate on a 1 year, pure discount loan of $275,000?
Please indicate the impact on the Cash Account of the following corporate actions a) A dividend payment made from funds from a sale of debt b)Real estate being purchased with short term debt c) Inventory is bought on credit d)Interest on long term de..
A house you are looking to purchase costs $200,000. You have $29,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requries annual payments..
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