Consider a 4-year project that require $70,000 initial investment (at t=0) and generates an aftertax cash flow of $20,000; $40,000; $40,000, and $30,000 at years t=1, 2, 3, and 4 respectively. The cost of capital is 18%. Lets call it project X.

Find NPV of the project, Find EAA (Equivalent Annual Annuity) of the project

An alternative project the company considers (lets call it project Y) is a 6-year project that has NPV=$19,409.11, EAA of $5,549.26, and a Payback Period of 4 years. If the company is only able to carry one project at any given time (and is only able to start a new project once the current project has been completed), which project (X or Y) the company should implement and why? You must answer the why question correctly to receive any credit for this problem.