What is the equivalent annual cost

Assignment Help Financial Management

Reference no: EM131853709

1. A project will produce an operating cash flow of $1,704,000 a year for three years. The initial cash outlay for equipment will be $2,850,000. The net aftertax salvage value of $350,000 will be received at the end of the project. The project requires $109,000 of net working capital that will be fully recovered. What is the net present value of the project if the required rate of return is 12 percent?

$1,347,222

$1,275,649

$1,517,410

$1,460,428

$1,580,206

2. Assume a machine costs $780,000 and lasts five years before it is replaced. The operating cost is $86,200 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 12 percent? (Hint: the EAC should account for both initial investment and annual operating costs)

$318,875.58

$252,400.62

$280,830.66

$279,310.27

$302,579.59

Reference no: EM131853709

Questions Cloud

Evaluate all segments of the general business environment : Evaluate all segments of the general business environment and identify some trends that may affect the business: Analyze how those trends are affecting.

Estimate the standalone selling price for internet service : Assume there is no reliable data with which to estimate the standalone selling price for the Internet service.

Formulate a linear programming model for given problem : A clothier makes coats and slacks. The two resources required are wool cloth and labor. The clothier has 150 square yards of wool and 200 hours of labor.

How you plan on utilizing the model to reach mentees : Coaching or mentoring model that you would like to use after completing this class. Summarize the coaching or mentoring model.

What is the equivalent annual cost : What is the equivalent annual cost if the required rate of return is 12 percent?

Which soure should the manger consult : A clinical manager of a hospitals tobacco cessation program is seeking new effective clinical guidelines. Which soure should the manger consult?

How can coaching activities benefit the culture : How can coaching activities benefit the culture in your work environment? Is it beneficial to develop activities individually or as a group activity?

Discuss about the new form of discrimination : Clones might be considered expendable people, a new slave population-or perhaps so valuable that they would become a preferred population group.

What will you do to get consumers : A click through rate is the percentage of visitors to an Internet site who click on an advertisement link. Some people click on a product.

User Account

All Pages