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# Equivalent Annual Annuity for projects with unequal length

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Two Projects with unequal length and cost of capital 10%. Which is the best project and please show the steps how to solve for equivalent annual annuity in unequal projects.

Yr. 0 Project 1: (\$150,000) Project 2: (\$200,000)
1 \$80,000 \$40,000
2 \$60,000 \$50,000
3 \$50,000 \$50,000
4 \$60,000
5 \$50,000
6 \$53,000

#### Solution Preview

Two Projects with unequal length and cost of capital 10%. Which is the best project and please show the steps how to solve for equivalent annual annuity in unequal projects.

Yr Project 1 Project 2
0 (\$150,000) (\$200,000)
1 \$80,000 \$40,000
2 \$60,000 \$50,000
3 \$50,000 \$50,000
4 \$60,000
5 \$50,000
6 \$53,000
PVIFA= Present Value Interest Factor for an Annuity
It can be read from tables or calculated using the following equation
PVIFA( n, r%)= =[1-1/(1+r%)^n]/r%

Step 1: Calculate the NPV of each project

Net Present ...

#### Solution Summary

Calculates Equivalent Annual Annuity for two projects with unequal length.

\$2.19