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What is the equivalent annual annuity

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Reference no: EM13983666

Question:

Carlyle Inc is considering two mutually exclusive projects. Both require an initial investment of 15,000 at t=0.

Project S has an expected life of 2 year with after tax cash inflows of 7,000 and 12,000 at the end of year 2 with no changes in its cash flows.

Project L has an expected life of 4 years with after tax of 5,200 at the end of each next 4 years each project has a WAAC of 9%.

What is the equivalent annual annuity of the most profitable project?

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Reference no: EM13983666

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