Question: Consider the following project with a 4 - year life. If terminated prior to 4 years, the equipment used will have a positive salvage value.

Consider the following project with a 4-year life. If terminated prior to 4 years, the equipment used will have a positive salvage value. Cash flows from the project and salvage values at various stages are shown in the table below. Choose the optimal operating life of the project. Assume aWACCof11%.YearCash FlowSalvage Value0-5,0664,55913,2803,64822,2732,28031,51268445620A)2 yearsB)4 yearsC)1 yearD)3 yearsE)0 years

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