Question: ) What are the techniques involved in comparing projects with unequal lives? Explain the techniques in detail. (5 marks) Q3. 2) Promotion Ltd. has to

) What are the techniques involved in comparing projects with unequal lives? Explain the techniques in detail. (5 marks) Q3. 2) Promotion Ltd. has to choose between two highway infrastructure projects. They can submit a bid for only one of the two options. The details of Project 1 and Project 2 are provided below. Time Project 1 Cash flows (Millions) Project 2 Cash flows (Millions) 0 -1500 -2600 1 750 750 2 800 750 3 850 750 4

750 5

750 6

750

Considering specifically on the fact that the projects have unequal lives, which project will you choose (based on the relevant capital budgeting techniques) and why? Please note that the discount rate is 8%. Justify your answer. (10 marks)

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