Project X has an upfront $3.5 lion capital which is converted into an equivalent seven year annuity at a discount rate of 8% per year. Project Z has a $7 million initial capital outlay and will last for 14 years. Project Z has the same discount rate as Project X. What is the annualized capital cost of Project X? O $766,912 O $742,753 O $528,050 O $672,253

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Project X has an upfront $3.5 million capital expe
which is converted into an equivalent seven year annuity
at a discount rate of 8% per year. Project Z has a $7
million initial capital outlay and will last for 14 years.
Project Z has the same discount rate as Project X. What
is the annualized capital cost of Project X?
O $766,912
O $742,753
O $528,050
O $672,253
Transcribed Image Text:Project X has an upfront $3.5 million capital expe which is converted into an equivalent seven year annuity at a discount rate of 8% per year. Project Z has a $7 million initial capital outlay and will last for 14 years. Project Z has the same discount rate as Project X. What is the annualized capital cost of Project X? O $766,912 O $742,753 O $528,050 O $672,253
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