A company is considering the purchase of one of two mutually

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Reference no: EM13803858

A company is considering the purchase of one of two mutually exclusive projects for improving its assembly line. The company plans to use a 12% cost of capital for evaluating these two equal-risk projects. The initial outlay and annual cash flows over the life of each project are shown in the following table:

 

Year

0

1

2

3

4

L

-$130,000

35,000

5,500

62,000

81,000

S

-$94,500

56,000

57,000

 

 

 

 

Reference no: EM13803858

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