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A$12$

$A$

A

B

C

D

E

G

$H$

I

F

G

$($e$)$

$1$

$$100,000$ may be used to purchase equipment with a salvage value of $$8,000$ after $6$ yrs $($Project A$),$ or $...$it may be used as working capital for Project $B$ and the investment will be returned after $6$ yrs; $RRR=14\%$; annual inflows for are $$20,000$ and $$16,000$ for Projects A and B$,$ respectively.

Invest $$100,000$ in Project $A$ or $B?$

Hint: treat the $$100,000$ as "salvage value"for Project $B$

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