Determine equivalent annual annuity of profitable project

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Problem: Wilson Co. is considering two mutually exclusive projects. Both require an initial investment of $40,000 and their risks are average for the firm. Project X has an expected life of 2 years with after-tax cash inflows of $20,000 and $38,000 at the end of Years 1 and 2, respectively. Project Y has an expected life of 4 years with after-tax cash inflows of $25,000 at the end of each of the next 4 years. The firm's WACC is 11.00%. Determine the equivalent annual annuity of the most profitable project.

Reference no: EM133616882

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