You are to use the equivalent annual annuity method for

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Projects C and W are mutually exclusive, and they have the following net cash flows:

Year

Project C

Project W

----

---------

---------

0

($50,000)

($100,000)

1

30,000

40,000

2

40,000

40,000

3

50,000

40,000

4

0

40,000

5

0

40,000

You are to use the equivalent annual annuity method for comparing these projects since they have unequal lives. The cost of capital is 10%. Which project should be chosen?

Reference no: EM13571106

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