Question: Q8 Carlyle Inc. is considering two mutually exclusive projects. Both require an initial investment of $14,200 at t = 0. Project S has an expected

Carlyle Inc. is considering two mutually exclusive projects. Both require an initial investment of $14,200 at t = 0. Project S has an expected life of 2 years with after-tax cash inflows of $7,400 and $11,900 at the end of Years 1 and 2, respectively. In addition, Project S can be repeated at the end of Year 2 with no changes in its cash flows. Project L has an expected life of 4 years with after-tax cash inflows $5,300 at the end of each of the next 4 years. Each project has a WACC of 8%. What is the equivalent annual annuity of the most profitable project? Do not round your intermediate calculations.

a. $2,365.62

b. $2,190.38

c. $1,012.72

d. $1,330.30

e. $1,600.54

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