Question: Calculate the EAA for the given projects. Project NPV Life (years) Discount Rate K $200,000 5 10% L $300,000 7 12% What is the EAA

Calculate the EAA for the given projects.

Project

NPV

Life (years)

Discount Rate

K

$200,000

5

10%

L

$300,000

7

12%

What is the EAA for Project K? 

What is the EAA for Project L? 

Requirement: Calculate the EAA for Project K and Project L under different conditions.

What is the EAA for Project K if the life of the project is extended to 6 years? 

What is the EAA for Project L if the discount rate is reduced to 10%?

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