Question: The Pottsville Paint Co. is considering 2 mutually exclusive projects with the following cashflows. The firm's discount rate is 12%. Project F Project G Year

The Pottsville Paint Co. is considering 2 mutually exclusive projects with the following cashflows. The firm's discount rate is 12%.

Project F Project G

Year CF Year CF

0 (8.2 million) 0 (7.3 million)

1 5.8 million 1 5.6 million

2 3.1 million 2 4.1 million

3 2.2 million

Calculate the equivalent annual annuity for each project. Which project should be accepted and why?

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