In alternative investments, constant cash flow stream is equal to initial cash flow stream in approach which is classified as?

Question

In alternative investments, constant cash flow stream is equal to initial cash flow stream in approach which is classified as?

greater annual annuity method
equivalent annual annuity
lesser annual annuity method
zero annual annuity method

LohaHridoy

6 views

2025-01-04 04:42

1 Answers

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AhmedNazir · Accepted Answer · 2022-09-01T13:21:41+06:00

Answer: Option 2

In alternative investments, constant cash flow stream is equal to initial cash flow stream in approach which is classified as equivalent annual annuity. The equivalent annual annuity approach is one of two methods used in capital budgeting to compare mutually exclusive projects with unequal lives. The EAA approach calculates the constant annual cash flow generated by a project over its lifespan if it was an annuity.