The NPV is:
NPV=−(315,000+25,000)+−35,000+63,0001+0.11+−35,000+63,0001.112+−35,000+63,0001.113+−35,000+63,0001.114+−35,000+63,000+25,0001.115=−221,678.6.NPV = -(315,000 + 25,000) + \frac{-35,000 + 63,000}{1 + 0.11} + \frac{-35,000 + 63,000}{1.11^2} + \frac{-35,000 + 63,000}{1.11^3} + \frac{-35,000 + 63,000}{1.11^4} + \frac{-35,000 + 63,000 + 25,000}{1.11^5} = -221,678.6.NPV=−(315,000+25,000)+1+0.11−35,000+63,000+1.112−35,000+63,000+1.113−35,000+63,000+1.114−35,000+63,000+1.115−35,000+63,000+25,000=−221,678.6.
The project’s equivalent annual cost is:
EAC=−221,678.6∗0.111−1.11−5=−59,979.65.EAC = \frac{-221,678.6*0.11}{1 - 1.11^{-5}} = -59,979.65.EAC=1−1.11−5−221,678.6∗0.11=−59,979.65.
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Dear Mohammed Abdul Hafeez, 315000/5 = 63000 is the depreciation
hi how did you get 63000
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Dear Mohammed Abdul Hafeez, 315000/5 = 63000 is the depreciation
hi how did you get 63000
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