Question: You are deciding to choose between two mutually exclusive projects. a. option1: project X will cost $6,000 to install and $3300 a to run year

You are deciding to choose between two mutually exclusive projects.

a. option1: project X will cost $6,000 to install and $3300 a to run year and will last for three years.

b. option 2: project Y will cost $7,000 to install and $2600 a to run year and will last for four years. Let the WACC = 0.07 Estimate the NPV of project X. Answer for part 1 Estimate the Equivalent annuity cost of project X.

Answer for part 2 Estimate the NPV of project Y.

Answer for part 3 Estimate the Equivalent annuity cost of project Y.

Answer for part 4 Which option would you choose option 1 or 2?

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