PROBLEM 10.2 A company is faced with the problem of choosing between two mutually exclusive projects. Project A requires a cash outlay of 100,000 and cash running expenses of 735,000 per year. On the other hand, Project B will cost 150,000 and require cash running expenses of 20,000 per year. Both the machines have an eight-year life. Project A has a 4,000 salvage value and Project B has 14,000 salvage value. The company's tax rate is 50 per cent and has a 10 per cent required rate of return. Assume depreciation on straight-line basis and no tax on salvage values of assets. Which project should be accepted?