What Is the Equivalent Annual Cost for a Project That

question 52

Multiple Choice

What is the equivalent annual cost for a project that requires a $40,000 investment at time-period zero, and a $10,000 annual expense during each of the next 4 years, if the opportunity cost of capital is 10 percent?

• A)$20,000.00
• B)$21,356.95
• C)$22,618.83
• D)$25,237.66 NPV = 40,000 + 10,000

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Definitions:

Stepwise Regression

A method of regression analysis in which the selection of predictive variables is carried out by an automatic procedure, adding or removing predictors based on specific criteria.

Independent Variables

Variables in an experiment that are manipulated or changed to observe their effect on dependent variables.

Regression Model

A mathematical model that estimates the relationship between a dependent variable and one or more independent variables.

Independent Variables

Elements in a research or modeling scenario that are deliberately modified to examine their influence on variables that are affected by them.