JBL Co. has designed a new conveyor system. Management must choose among the three alternative courses of actions : (1) The firm can sell the design outright to another corporation with payment over two years (2) It can license the design to another manufacturer for a period of 5 years, it it likely product life. (3) It can manufacture and market the system itself; this alternative will result in 6 years of cash inflows. The company has a cost of capital of 12%. Cash flows associated with each alternative are as follows;

Alternative	Sell	License	Manufacture
Initial investment (CF0)	$ 200,000	$ 200,000	$ 450,000
Year	Cash inflow
1	200,000	250,000	200,000
2	250,000	100,000	250,000
3	-	80,000	200,000
4	-	60,000	200,000
5	-	40,000	200,000
6	-	-	200,000

Calculate the net present value of each alternative and rank the alternatives on the basis of NPV?

Calculate the annualized net present value (ANVP) of each alternative and rank them accordingly?

Why ANPV preferred over NPV when ranking projects with unequal lives?