Question: Bagel Pantry Inc. is considering two mutually exclusive projects with widely differing lives. The companys cost of capital is 12%. The project cash flows are

Bagel Pantry Inc. is considering two mutually exclusive projects with widely differing lives. The company€™s is 12%. The project cash flows are summarized as follows.

a. Compare the projects using payback.
b. Compare the projects using NPV.
c. Compare the projects using IRR.
d. Compare the projects using the replacement chain approach.
e. Compare the projects using the EAA method.
f. Choose a project and justify yourchoice.

Project A Project B $(25,000) 14,742 14,742 14,742 $(23,000) 6,641 6,641 6,641 6,641 6,641 6,641 6,641 6,641 6,641

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a Payback Period A PB 25000 14742 17 years B PB 23000 6641 35 years Project A is preferred b NPV C 0 ... View full answer

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