A company is considering two average-risk alternative ways of producing a product. Process A has a cost of $11,000 and will produce net cash flows of $7,500 per year for 2 years. Process B will cost $12,500 and will produce cash flows of $6,500 per year for 3 years. The company can extend each of the two alternatives as needed. The cash inflows occur at the end of each year, and this company’s cost of capital is 11 percent. What is the EAA of the worse project?

Answer rating: 100% (QA)

To determine the Equivalent Annual Annuity EAA of the worse project we need to calculate the present ... View the full answer