EQUIVALENT ANNUAL ANNUITIES
1. Black Sheep broadcasting is considering a five year-project that has a weighted average cost of capital of 14% and a net present value (NPV) of $80,720. Black sheep broadcasting can replicate this project indefinitely.
What is the equivalent annual annuity (EAA) for this project?
a. $23.512
b. $21.161
c. $24.688
d. $27,039
2. An analyst will need to use the EAA approach to evaluate projects with unequal live when the projects are ________.
a. Mutually exclusive OR
b. Independent