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# A five - year project has an initial fixed asset investment of \$290 , 000 , an initial NWC 3 investment of \$25 , 000 , and an annual OCF of - \$35 ,

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A five - year project has an initial fixed asset investment of \$290 , 000 , an initial NWC
3
investment of \$25 , 000 , and an annual OCF of - \$35 , 000 . The fixed asset is fully
depreciated over the life of the project and has no salvage value . If the required
return is 1 1 percent , what is this project's equivalent annual cost , or EAC ?
4
Initial fixed asset investment \$
290, 000
Initial NWC investment
\$
25, 000
\00 &quot;
Annual OCF
( 35 , 000 )
Required return
17 %
10
* Depreciation staight - line
11
over life
5
12
13
14
Complete the following analysis . Do not hard code values in your calculations*
You must use the built-in Excel functions to answer this question .
15
16
Cash flows
17
Year O
18
Year !
A
D
E
F
G
H
I
J
Year 2
Year 3
Year 4
Year 5
UP UP
NPV
26
EAC

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