Question
A firm is considering a project that requires an initial investment of $250,000. The life of this project is five years. Cash flows for each
A firm is considering a project that requires an initial investment of $250,000. The life of this project is five years. Cash flows for each year are estimated as follows:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| $80,000 | $120,000 | $160,000 | $40,000 | -$90,000 |
The cost of capital of this project is 8%. Calculate the equivalent annual annuity.
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
11th edition
324422870, 324422873, 978-0324302691
