Mellon Corp. is considering two mutually exclusive projects to boost their tourist revenue. Project A costs $60,000 and would produce net cash flows of $25,000 for 5 years. Project B cost $100,000 and will produce annual net cash flows of $25,000 for 10 years. If Mellon cost of capital is 12%, which project should be chosen using the equivalent annual annuity method? Show all work.

a. Project A, EAA $8,356

b. Project B, NPV is $41,250

c. Project A, NPV is $33,300

d. Project B, EAA $6,203

Jack Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. Net working capital required is $5,000. What is the Year 3 cash flow? Show work.

Equipment cost (depreciable basis) $95,000

Sales revenues, each year $65,000

Operating costs (excl. deprec.) $30,000

Tax rate 35%

Sam Corp. is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero-salvage value, and would require some additional working capital that would be recovered at the end of the project's life. Revenues and other operating costs are expected to be constant over the project's life. What is the project's NPV? WAAC = 12%, tax rate = 35% (Hint: Cash flows are constant in Years 1 to 3.) Show work.

Net investment in fixed assets (basis) $75,000

Required new working capital $15,000

Sales revenues, each year $75,000

Operating costs (excl. deprec.), each year $25,000