Question: Wilson Co. is considering two mutually exclusive projects. Both require an initial investment of $9,100 at t-o. Project X has an expected life of 2
Wilson Co. is considering two mutually exclusive projects. Both require an initial investment of $9,100 at t-o. Project X has an expected life of 2 years with after-tax cash inflows of $5.500 and $7.400 at the end of Years 1 and 2, respectively. In addition, Project X can be repeated at the end of Year 2 with no changes in its cash flows. Project Y has an expected life of 4 years with after-tax cash inflows of $4,300 at the end of each of the next 4 years. Each project has a WACC of 9%. What is the equivalent annual annuity of the most profitable project? Do not round intermediate calculations. a. $1,236.021 b. $1,491.12 c. $1,878.12 d. $1,663.16 e. $1,723.04
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