Question: Kermit Kite Co. has 2 Projects under consideration- PROJECT C and PROJECT D with the following cashflows. PROJECT C PROJECT D Year 0 (800,000) Year

Kermit Kite Co. has 2 Projects under consideration- PROJECT C and PROJECT D with the following cashflows.

PROJECT C PROJECT D

Year 0 (800,000) Year 0 (360,000)

Year 1 450,000 Year 1 200,000

Year 2 350,000 Year 2 265,000

Year 3 215,000

The firm's cost of capital is 12%.

Calculate the EAA for each project. Which is the preferred project under EAA and why?

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