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QUESTION
A five-year project has an initial fixed asset investment of $260,000, an initial NWC investment of $20,000, and an annual OCF of $19,000.
A five-year project has an initial fixed asset investment of $260,000, an initial NWC investment of $20,000, and an annual OCF of −$19,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is this project’s equivalent annual cost, or EAC?
