A project's equivalent annual annuity (EAA)is the annuity cash flow that yields the same present value as the project's NPV.

Question

Quizplus · Accepted Answer

This is a correct statement describing the concept of Equivalent Annual Annuity (EAA). It represents the equal annual cash flow generated by a project that has an equivalent present value to that of the project's net present value. By calculating the EAA, decision-makers can compare and evaluate projects with different cash flow patterns and lifetimes in order to determine which project offers the best investment opportunity.

A Project's Equivalent Annual Annuity (EAA)is the Annuity Cash Flow