A cost-cutting project has an initial cost of $1,200 and annual costs of $380 for each year of the project's 4-year life. The equivalent annual cost for this project is best described as the:

4-year annuity payment that has the same net present value as the project's costs given a stated discount rate.

4-year total of all costs divided by four. annual sales needed to offset these additional costs.

lump sum payment at Time 0 that is equal to these additional costs at a given discount rate.

4-year average aftertax cash flow resulting from the annual costs.

Answer rating: 100% (QA)

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