Two mutually exclusive projects being considered by a firm and have the following projected cash flows:

Project A Project B

Year Cash FlowQUESTION $11$

Two mutually exclusive projects being considered by a firm and have the following projected cash flows:

The cost of capital is $10$ percent. Using the NPV rule, evaluate both projects using the equivalent annual annuity approach

Accept Project A

Accept Project B

Accept both

Accept neither Cash Flow

$0($$$120,000)($$$120,000)$

$150,00030,000$

$250,00030,000$

$350,00030,000$

$430,000$

$530,000$

$630,000$

The cost of capital is $10$ percent. Using the NPV rule, evaluate both projects using the equivalent annual annuity approach