When is the Equivalent Annual Annuity technique to be used?

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When is the Equivalent Annual Annuity technique to be used?

Opportunity Cost:

An opportunity cost predicts possible future cash inflows that an individual can earn if he misses the opportunity over different choices. In microeconomics, it is useful for making day-to-day decisions according to the market conditions.

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Two methods under capital budgeting compare projects with unequal lives one of which is the EAA method. An Equivalent Annual Annuity (EAA) gives out...

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Annuities: Types & Benefits

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Chapter 9 / Lesson 5
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Annuities are fixed amounts of money paid out on a regular basis. Learn about the definition, types, and benefits of annuities. Explore investment options, and understand the disadvantages of annuities.


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