Question: The projected cash flows for two mutually exclusive projects are as follows: If the firm's capital is 10% and the equivalent annual annuity method is

The projected cash flows for two mutually exclusive projects are as follows:

If the firm's capital is 10% and the equivalent annual annuity method is used to eliminate the disparity between the project's lives, which project should be undertaken?
a. A
b. B
c. either because the difference in lives makes a comparison meaningless
d. A but the EAAs are close that either is probablyok

Year Project A Project B 0 S (150,000) S (200,000) 1S 80,000 40,000 2 S60,000 S 50,000 3 S 50,000 S50,000 S 60,000 S 50,000 S 53,000

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