Assume the NPV of a project is $1.5 million.The project is expected to last five years.What is the equivalent annual benefit if the discount rate is 8%?
A)$375,685
B)$300,000
C)$347,856
D)$324,000

Question

Quizplus · Accepted Answer

The equivalent annual benefit (EAB) can be calculated using the formula for the annuity factor. The annuity factor for 5 years at an 8% discount rate is approximately 3.9927. Dividing the NPV of $1.5 million by this factor gives an EAB of approximately $375,685.

Assume the NPV of a Project Is $1