Crochet Co. is considering purchasing a new machine, which would require an initial outlay of $350,000 and produce expected cash flows in years 13 of $90,000 per year. The machine requires a maintenance in year 5 to support future operations, and the maintenance costs $150,000. You can sell the machine for $500,000 in year 6.

You have determined that the current after-tax cost of the firm's capital (required rate of return) for each source of financing is as follows:

After-tax cost of long-term debt	9%
Cost of common stock	15%

4. The company is planning for investment activities for the next fiscal year. The R&D department discovers two mutually exclusive projects.

Project A has a life span of 3 years. It requires a $50,000 initial outlay and expected to generate free cash flows of $30,000 in the first two years, and $20,000 in year 3.

Project B requires an initial outlay of $150,000 and it is expected to generate free cash flows of $40,000 in years 1 to 4, $30,000 in years 5 to 6, and $50,000 in year 7.

What is the equivalent annual annuity of two projects?

Project A:

$

Project B:

$