10. Equivalent annual annuities Another method to deal with the unequal life problem of projects is the equivalent annual annuity (EAA) method. In this method the annual cash flows under the alternative investments are converted into a constant cash flow stream whose NPV is equivalent to the NPV of the comparative project's initial stream. Consider the case of Lumbering Ox Truckmakers: $22,336 Lumbering Ox Truckmakers is considering a five-ye (NPV) of $80,720. Lumbering Ox Truckmakers can $27,039 hat has a weighted average cost of capital of 14% and a net present value is project indefinitely. $24,688 $23,512 The equivalent annual annuity (EAA) for this project is The EAA approach to evaluating projects with unequal lives do a good job of taking inflation into account. 10. Equivalent annual annuities Another method to deal with the unequal life problem of projects is the equivalent annual annuity (EAA) method. In this method the annual cash flows under the alternative investments are converted into a constant cash flow stream whose NPV is equivalent to the NPV of the comparative project's initial stream. Consider the case of Lumbering Ox Truckmakers: Lumbering Ox Truckmakers 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. Lumbering Ox Truckmakers can replicate this project indefinitely. does The equivalent annual annuity (EAA) for this project is does not The EAA approach to evaluating projects with unequal lives do a good job of taking inflation into account