What is this projects equivalent annual cost

Assignment Help Financial Management
Reference no: EM13908815

A five-year project has an initial fixed asset investment of $285,000, an initial NWC investment of $25,000, and an annual OCF of −$24,000. 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: EM13908815

Questions Cloud

Create pipe-and-filter network that will read data stream : Create a pipe-and-filter network that will read the data stream in FlightData.dat file, convert the temperature measurements from Fahrenheit to Celsius, and convert altitude from feet to meters - How would this impact the key quality attributes of ..
Discuss the rationale that underlies management''s belief : Briefly discuss the rationale that underlies management's belief.
Inflation has relatively stable over last several decades : Inflation has been relatively stable over the last several decades, averaging roughly 2.85% per year. A local business owner began manufacturing snowshoes 6 years ago, at which time her raw materials cost $23.85 per pair. Taking into account the effe..
Database for the application : After creating the correct structure of the required tables, you need to perform the following tasks to create a database for the application: 1. Create a database for the application.
What is this projects equivalent annual cost : A five-year project has an initial fixed asset investment of $285,000, an initial NWC investment of $25,000, and an annual OCF of −$24,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
Increased debt usage on weighted average cost of capital : In the Modigliani Miller perfect world with no taxes, if we assume that the effect of adding debt to firm's capital structure is exactly balanced by an increase in the cost of equity as more debt is added, what is the effect of increased debt usage o..
What is percys cost of common equity : Percy Motors has a target capital structure of 35% debt and 65% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 12%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 15.00%...
Explain the options for receiving the money : Most states have turned to the lottery to raise money for education and other state financing needs. Determine the largest payout for the state in which you reside. Explain the options for receiving the money and select the method you would choose. P..
Tempo company fixed budget for the first quarter : Tempo Company's fixed budget for the first quarter of calendar year 2013 reveals the following.

Reviews

Write a Review

Financial Management Questions & Answers

  What values to plug into the financial calculator

Your grandmother is gifting you $125 a month for four years while you attend college to earn your bachelor's degree. At a 6.5 percent discount rate, what are these payments worth to you on the day you enter college? what values to plug into the finan..

  Imperfect capital markets makes the total value

The presence of ____________imperfect capital markets makes the total value of the firm independent of its capital structure under the NOI approach. a) Arbitraje b) taxes, c) institutional investors, d) bankruptcy

  Expected to pay dividends-what is the current share price

Lohn Corporation is expected to pay the following dividends over the next four years: $17, $13, $12, and $7.50. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 1..

  The seller will repurchase them in a short period of time

In a _____, the Fed purchases securities with an agreement that the seller will repurchase them in a short period of time.

  Bond yields-bonds make semiannual payments

Heginbotham Corp. issued 15-year bonds two years ago at a coupon rate of 7.9 percent. The bonds make semiannual payments. If these bonds currently sell for 109 percent of par value, what is the YTM?

  Law requires that all brokers have an initial margin

Suppose that you have $82,500 to invest and would like to purchase 1500 shares of ABC Corp's shares which are currently trading for $100.00 per share. Law requires that all brokers have an Initial margin of 50% but your broker demands a 55% initial m..

  In your initial post identify and recommend at least 1

in your initial post identify and recommend at least 1 credible web site that an investor can visit to find the current

  Heavy use of off-balance sheet lease financing will tend to

In the lease versus buy decision, leasing is often preferable

  Unexpected increase in firms accounts receivable period

Which one of the following would tend to create an unexpected increase in a firm's accounts receivable period?

  What is the firms times-interest-earned ratio

A firm has total interest charges of $10,000 per year, sales of $1 million, a tax rate of 40 percent, and a net profit margin of 6 percent. What is the firm's times-interest-earned ratio? show work

  Distinguishing features of walmart china distribution system

How could vendors be encouraged to participate in Wal-Mart China’s sustainability initiatives? What are the distinguishing features of Wal-Mart China’s distribution system? How can Wal-Mart improve sustainability in its distribution and retail operat..

  Number of pints made and sold to the nearest integer

Initially, you have lost 20,000 dollars in the stock market and you continue to lose 350 dollars per month. In how many months will it be before your losses total 33,040 dollars, thus your balance is - 33,040? What is the monthly breakeven point for ..

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