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Calculating Equivalent Equal Annuity Values

Determine the EAA of each project using the given table:

Year Cash flows( Short) Cash flows (long)
0 -1500 -2600
1 +950 +850
2 +950 +850
3 +950 +850
4 +850
5 +850
6 +850

FOR THE Equivalent Annual Annuity, the cost of capital to be used is 8%.

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Please refer attached file for better clarity of table.

Years Cash Flow (Short) Cash Flow (Long) PV factor, PVF PV (Short) PV (Long)
n Cn (S) Cn (L) 1/(1+8%)^n Cn(S)*PVF Cn(L)*PVF
0 -1500 -2600 1.0000 -1500.00 ...

Solution Summary

Solution describes the steps to calculate EAA in the given cases.

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