What is this project equivalent annual cost

Assignment Help Financial Management
Reference no: EM13949290

A five-year project has an initial fixed asset investment of $270,000, an initial NWC investment of $22,000, and an annual OCF of −$21,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 11 percent, what is this project’s equivalent annual cost, or EAC?

Reference no: EM13949290

Questions Cloud

Performed on tissue samples and not individual cells : Why must the c14 dating method be performed on tissue samples and not individual cells
Create and populate tables within a database using ms access : Departments all have department IDs, department names, and a department description, and a department manager.
The total book value of the firms equity : The total book value of the firm’s equity is $16 million; book value per share is $32. The stock sells for a price of $35 per share, and the cost of equity is 13%. The firm’s bonds have a face value of $4 million and sell at a price of 140% of face v..
Nominal gain of the amplifier : An inverting amplifier uses two 10 percent tolerance resistors: RF = 33 k2 andRS = 1.2 k2. a. What is the nominal gain of the amplifier?
What is this project equivalent annual cost : A five-year project has an initial fixed asset investment of $270,000, an initial NWC investment of $22,000, and an annual OCF of −$21,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
Explain why these instances occur : When you are driving down the road and approaching a dead skunk, the smell begins miles away and gets stronger as you drive closer to the skunk. When you apply perfume or cologne, the smell is strong in the air at first but does not linger forever; i..
Magdalena currently lives in bedford : Magdalena has not remarried as of the end of 2014. Magdalena currently lives in Bedford, Pennsylvania. She was living in Pittsburgh when her husband passed away but she moved back to her childhood home so she could get help from her family raising he..
Is there a difference between legal and ethical behaviors : Question- Is there a difference between legal and ethical behaviors? Explain and provide appropriate examples
What is heusers after-tax cost of debt : The heuser company's currently outstanding bonds have a 10% coupon and a 12% yield to maturity. Heuser believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is heuser's after-ta..

Reviews

Write a Review

Financial Management Questions & Answers

  Labor savings and depreciation

Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: Machine 190-3, which has a cost of $215,000, a 3-year expected life, and after-tax cash flows (labor savings and depre..

  According to the expectations theory

According to the expectations theory, if the one observed interest rate today is 4%, the two year forward one year from now is 7%, and the three year forward rate two years from now is 10 %, -- what is the observed five rate today.to be right answer ..

  What are the implied interest rates

Suppose the spot price for Euro is $1.15, the futures price for delivery in 6 months is $1.1471286. Assume that the 6 month borrowing/lending rate in Euro is 0.75percent (annually, continuous compounding) and the corresponding rate in $ is 0.25percen..

  Contrast the effects of dividends vs. stock repurchases

Compare and contrast the effects of dividends vs. stock repurchases, the pros and cons of each, and how the managers decide between the two.

  Working capital will revert back to normal at end of project

Your firm is contemplating the purchase of a new $672,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. It will be worth $56,000 at the end of that time. Working capital will revert ba..

  Assume that the risk premium

Grammy phone is a cellular firm that reported a net income of $50 million in the most recent financial year. The firm had $1 billion in debt, on which it reported interest expenses of $100 million in the most recent financial year. Also assume that t..

  What is the expected return on this stock

The stock of Chocolate Galore is expected to produce the following returns, given the various states of the economy. What is the expected return on this stock?

  Type of interest rate risk does financial institution face

A commercial bank has $200 million of floating rate loans yielding the T-bill rate plus 2%. These loans are financed by $200 million of fixed-rate deposits costing 9%. A savings association has $200 million of mortgages with a fixed rate of 13%. What..

  Performance evaluation of a portfolio is difficult

Performance evaluation of a portfolio is difficult. What challenges can investment managers face and what recommendations would you make in effort to meet these challenges? Portfolio insurance has always had an intuitive appeal to investors, particul..

  Key variables in the owner wealth maximization process

The key variables in the owner wealth maximization process are _____

  Approaches operating cash flow ebit-depreciation-taxes

A proposed new project has projected sales of $129,000, costs of $63,000, and depreciation of $13,200. The tax rate is 30 percent. Calculate operating cash flow using the four different approaches. (Do not round intermediate calculations.) Approaches..

  What is moda textile factory''s competitive advantage?

What is Moda Textile Factory's competitive advantage?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd