Equivalent Annual Annuity (EAA) Approach

The EAA value represents the required size of an annual payment over an asset’s life to make the present value of the project’s operating cash flows equal to the net present value, when the cost of capital is applied as the discount rate.

EAA Process

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Mutually Exclusive Capital Projects with Unequal Lives

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Least Common Multiple of Lives Approach

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Corporate Finance Part 1

20 lessons

CFA Level 2: Corporate Finance Part 1 – Introduction

Introduction to Capital Structure and Leverage

Introductory Capital Budgeting Remarks

Expansion Projects vs. Replacement Projects and Cash Flows

Impacts of Depreciation Method Choice on Capital Budget Analysis

Inflation and Capital Budgeting

Mutually Exclusive Capital Projects with Unequal Lives

Equivalent Annual Annuity (EAA) Approach

Least Common Multiple of Lives Approach

Stand Alone Risk and Capital Projects

CAPM and a Capital Project’s Discount Rate

Capital Projects and Real Options

Common Pitfalls in Capital Budgeting

Capital Budgeting Alternatives to NPV and IRR Analysis

Modigliani-Miller and Capital Structure Theory

Evaluating Capital Structure Policy

International Differences in Financial Leverage

Dividend and Share Repurchase Policies

Factors Affecting Corporate Dividend Policy Decisions

Signals from Dividend Policies

Topics

Financial Analysis