Question: Project S requires an initial outlay at t = 0 of $14,000, and its expected cash flows would be $6,000 per year for 5 years.

Project S requires an initial outlay at t = 0 of $14,000, and its expected cash flows would be $6,000 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $37,500, and its expected cash flows would be $10,350 per year for 5 years. If both projects have a WACC of 13%, which project would you recommend?

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