Question: Problem 3 - Projects with unequal lives (11 marks. 20 minutes)~ You are trying to choose a new smartphone. Your discount rate is 10%. A

Problem 3 - Projects with unequal lives (11 marks. 20 minutes)~ You are trying to choose a new smartphone. Your discount rate is 10%. A salesman offers you two choices: . Smartphone X, which will last 4 years and costs $100 immediately and $400/year for 4 years. Smartphone Y, which will last 3 years, costs $0 immediately and $500/year for 3 years.~ a. Which smartphone do you choose? Show your work. (5 marks) tt Etttittttttttt b. The salesman attempts to convince you to buy smartphone Y and proposes that if you purchase smartphone Y, then you will receive a gift card that can be activated at the end of year 3. What should the value of the gift card be for you to be indifferent in choosing between smartphone X and smartphone Y? Show your work. (6 marks)

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