### A company is considering the purchase of one of two mutually

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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

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