medium · Principles of Finance capital-budgeting
How does the inclusion of a significant 'salvage value' at the end of a project's life affect its EAA calculation compared to a project with no salvage value?
- It only affects EAA if the project is being abandoned early.
- It increases the EAA by increasing the project's NPV.
- It decreases the EAA by reducing the total NPV.
- It has no effect on EAA because salvage value is non-operating.
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