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Unformatted text preview: ert back to NPV ∞ Assuming infinite replacement, the
EAAs are actually perpetuities. Get the
PV by dividing the EAA by the required
rate of return.
rate ∞ NPV 1 = 617/.14 = $4,407
∞ NPV 2 = 428/.14 = $3,057
NPV This doesn’t change the answer, of
course; it just converts EAA to a NPV
that can be compared.
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This note was uploaded on 01/17/2014 for the course GEB 3375 taught by Professor Sweo during the Winter '08 term at University of Central Florida.
- Winter '08