A 10-year project has an initial fixed asset investment of $38,640, an initial NWC investment of $3,680,

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A 10-year project has an initial fixed asset investment of $38,640, an initial NWC investment of $3,680, and an annual OCF of -$58,880. The fixed asset is fully depreciated over the life of the project and has no salvage value.


Required:

If the required return is 8 percent, what is the project's equivalent annual cost, or EAC? (Do not round your intermediate calculations.)

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Fundamentals of corporate finance

ISBN: 978-0073382395

9th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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