Question: A firm is evaluating two mutually exclusive projects that have unequal lives. The firm must evaluate the projects using the annualized net present value approach

A firm is evaluating two mutually exclusive projects that have unequal lives. The firm must evaluate the projects using the annualized net present value approach and recommend which project they should select. The firm's cost of capital has been determined to be 12 percent, and the projects have the following initial investments and cash flows:

Project A Project B
Initial Investment 35,000 42,000
1 25,000 12,000
2 19,000 13,000
3 14,000
4 15,000

1. Find the annualized NPV for project A and B (15%)

2. Based on the answers above, which project the firm should choose?

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