Question: George, Inc. is considering Project A and Project B, which are two mutually exclusively projects with unequal lives. Project A is an eight-year project that

George, Inc. is considering Project A and Project B, which are two mutually exclusively projects with unequal lives. Project A is an eight-year project that has an initial outlay or cost of $220,000. Its future cash in flows for years 1 through 8 are $49,000. Project B is a six-year project that has an initial outlay or cost of $185,000. Its future cash inflows for years1 through 6 are the same at $39,000. George uses the equivalent annual annuity (EAA) method and has a discount rate of 13.50%. Which project will George accept and why ?

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