Mulroney Corp. is considering two mutually exclusive projects. Both require an initial investment of $10,000 at t = 0. Project X has an expected life of 2 years with after-tax cash inflows of $6,000 and $8,000 at the end of Years 1 and 2, respectively. Project Y has an expected life of 4 years with after-tax cash inflows of $4,000 at the end of each of the next 4 years. Each project has a WACC of 8%.

18. Use the replacement chain approach to determine the common life NPV of the most profitable project.

a. $4,484

b. $4,734

c. $5,120

d. $5,897

e. $5,456

19. Use the EAA approach to determine the Equivelent annual annuity of the most profitable project.

a. $912.32

b. $980.79

c. $1,156.34

d. $1,353.85

e. $1,698.47