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A project has a NPV = $1,234
A project has a NPV = $1,234.50, a discount rate = 4%, and 5-year time period. What is the EAA for this project?
a) 277.30
b) 340.50
c) 456.20
d) 675.40
Expert Solution
Computation of the EAA for the project:-
EAA = NPV/((1-1/(1+rate)^n)/rate)
= $1,234.50/((1-1/(1+4%)^5)/4%)
= $1,234.50/4.4518
= $277.30
Hence, the correct option is a) $277.30
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