Consider each of the after-tax cash flows shown in Table P5.54.
Suppose that projects B and C are mutually exclusive. Suppose also that the required service period is eight years and that the company is considering leasing comparable equipment with an annual lease expense of $3,000. payable at the end of each year for the remaining years of the required service period. Which project is a better choice at 15%?

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TABLE P5.54 After-Tax Cash Flows C -$5,000 -2,000 -2,000 -2,000 -2,000 -2,000 -2,000 -2,000 11 0 1 2 3 4 5 6 7 8 B - $7,000 -2,500 -2,000 - 1,500 - 1,500 - 1,500 - 1,500 T