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A project with a 6 year life generates a positive net present value of $1,100. The discount rate is 8%.
To the nearest $, the equivalent annual benefit is:
Suggested Answer: B
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25 comments · newest first
ME
Mendy
9 months ago
Is it really that low? I expected higher!
KA
Katlyn
10 months ago
Totally agree, B is the right choice!
YU
Yun
10 months ago
Wait, how did they get $1,100 NPV with an 8% rate?
AR
Arletta
10 months ago
I think it’s definitely option B!
YV
Yvonne
10 months ago
The equivalent annual benefit is around $238.
LE
Lennie
11 months ago
I vaguely remember that we need to use the annuity formula for this. I think the answer might be option A, but I need to double-check my calculations.
VE
Veda
11 months ago
I’m a bit confused about the discount rate's impact on the equivalent annual benefit. I hope I can remember the steps to calculate it properly.
LO
Lonny
12 months ago
I think we practiced a similar question in class where we had to find the annual equivalent. I feel like the answer is around $5000, but I can't recall the exact calculation.
TE
Tess
12 months ago
I remember something about converting NPV to an equivalent annual benefit, but I'm not sure how to apply the formula correctly.
BE
Bettyann
12 months ago
Alright, let me think this through step-by-step. I need to use the formula for equivalent annual benefit, which involves the net present value, discount rate, and project life. I've got this!
SH
Shizue
1 year ago
Wait, how do I convert the net present value to an equivalent annual benefit? I'm not sure I fully understand this concept.
GA
Gabriele
1 year ago
This looks straightforward. I just need to remember the formula and do the math carefully. I'm confident I can get the right answer.
PE
Pete
1 year ago
Hmm, I'm a bit confused. I know we need to find the equivalent annual benefit, but I'm not sure how to calculate that from the net present value and discount rate.
SA
Sarah
1 year ago
Okay, I think I know how to approach this. I just need to use the formula for equivalent annual benefit and plug in the given values.
CH
Chara
1 year ago
Whoa, this is a tough one! I'm going to have to bust out my calculator for this one. Maybe I'll even remember to change the batteries this time.
KA
Kati
1 year ago
Hmm, let me think this through... I'm going to go with option D. It just feels right, you know?
NI
Nicholle
10 months ago
I agree with Arminda, A seems right!
RO
Ronald
10 months ago
Option D is interesting, but I’m not sure.
VI
Viva
11 months ago
I’m leaning towards option C.
AR
Arminda
11 months ago
I think option A makes the most sense.
IV
Ivette
1 year ago
I'm not sure, but I think the answer might be D) $693.
SA
Sabra
1 year ago
The equivalent annual benefit is definitely $693. I'm an ace at time value of money calculations!
AN
Annmarie
1 year ago
I think the equivalent annual benefit is $693.
VE
Veta
1 year ago
I agree with Ollie, because the equivalent annual benefit is calculated by dividing the NPV by the annuity factor at 8% for 6 years.
OL
Ollie
1 year ago
I think the answer is A) $5,085.