Axios, Inc. is considering Project A and Project B, which are two mutually exclusive projects with unequal lives. Project A is an eightyear project that has an initial outlay or cost of $180,000. Its future cash inflows for years 1 through 8 are $38,000. Project B is a sixyear project that has an initial outlay or cost of $160,000. Its future cash inflows for years 1 through 6 are the same at $36,000. Axios uses the equivalent annual annuity (EAA) method and has a discount rate of 11.50%. Will Axios accept the project?

A.

Axios accepts Project B because it has a more positive EAA.

B.

Axios rejects both projects because both have a negative NPV (and thus negative EAA).

C.

Axios accepts Project A because its EAA is about $2,396 and Project B's EAA is only about $1,097.

D.

Axios accepts Project A because its NPV (and thus EAA) is positive and Project B's NPV (and thus EAA) is negative.