Question: ABC Telecom has to choose between two mutually exclusive projects. If it chooses project A, ABC Telecom will have the opportunity to make a similar

ABC Telecom has to choose between two mutually exclusive projects. If it chooses project A, ABC Telecom will have the opportunity to make a similar Investment in three years. However, if it chooses project B, it will not have the opportunity to make a secand investment. The following tablets the cash flows for these projects. If the firm uses the replacement chain (common fe) approach, what will be the difference between the not present value (NPV) of project & and project 5, assuming that both projects have a weighted average cost of capital of 17 Cash Flow Project B Project A Year: -$17,500 Year: -$40,000 11,000 Year 1 10,000 Year 11 Year 2 16.000 Year 2 16,000 Year 31 15,000 Year 3: 15,000 mar 4 12,000 Year 5: 11,000 10,000 $9,618 O $16.030 O $17,63) O $14,427 O $12.00 $16,000 O $17,633 O $14,427 O$12,023 ABC Telecom is considering a five-year project that has a weighted average cost of capital of 13% and a NPV of $30,450. ABC Telecom can replicate this project indefinitely. What is the equivalent annual annuity (EAA) for this project? 0 $9,090 $8,657 O $10.358 $10,821 $7,358
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