Problem:
A 6-year project has an initial fixed asset investment of $22,680, an initial NWC investment of $2,160, and an annual OCF of -$34,560. The fixed asset is fully depreciated over the life of the project and has no salvage value.
Required:
Question: If the required return is 19 percent, what is the project's equivalent annual cost, or EAC?
- $-23,653.55
- $-35,378.58
- $-39,540.77
- $-41,621.86
- $-43,702.95
Note: Provide support for your rationale.