Question: Project A costs $200K. In year 1, it will earn $100K, $400K in year 2, $100K in year 3, and then never earn a cent.

Project A costs $200K. In year 1, it will earn $100K, $400K in year 2, $100K in year 3, and then never earn a cent. Project B costs

$400K. It earns $100K in year 1, $200K, $300K, $200K, and finally

$100K in subsequent years before becoming worthless after year 5.

Which project would you recommend and why? Assume a MARR of 10%.

At what interest rate would the two be identical?

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