Question: Bagel Pantry Inc. is considering two mutually exclusive projects with widely differing lives. The company's cost of capital is 12%. The project cash flows are

Bagel Pantry Inc. is considering two mutually exclusive projects with widely differing lives. The company's cost of capital is 12%. The project cash flows are summarized as follows:

Project A Project B

C0 ($25,000) ($23,000)

C1 $14,742 $ 6,641

C2 $14,742 $ 6,641

C3 $14,742 $ 6,641

C4 $ 6,641

C5 $ 6,641

C6 $ 6,641

C7 $ 6,641

C8 $ 6,641

C9 $ 6,641

QUESTION TO ANSWER

Compare the projects by using the replacement chain approach and compare the projects by using the EAA method.

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