Question: Mayco, Inc. is evaluating two mutually exclusive investment projects. Assume both projects can be repeated indefinitely. Printer A has an NPV of $20,000 over a

Mayco, Inc. is evaluating two mutually exclusive investment projects. Assume both projects can be repeated indefinitely. Printer A has an NPV of $20,000 over a 3-year life, and Printer B has a NPV of $25,000 over a 5-year life. The project types are equally risky, and the firm's cost of capital is 12%. Which of the following choices is closest to the equivalent annual annuity (EAA) of project A and B?

EAA (A) EAA (B)

A. $8,327 $6,935 B. $3,567 $5,326 C. $7,592 $5,779

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