16. Equivalent annual annuities Another method to deal with the unequal life problem of projects is the equivalent annual annuity (EAA) method. In this method the annual cash flows under the alternative investments are converted into a constant cash flow stream whose NPV is equivalent to the NPV of the comparative project's initial stream. Consider the case of Lumbering Ox Truckmakers: Lumbering Ox Truckmakers is considering a five-year project that has a weighted average cost of capital of 14% and a net present value (NPV) of $80,720. Lumbering Ox Truckmakers can replicate this project indefinitely What is the equivalent annual annuity (EAA) for this project? $23,512 $29,390 $27,039 $28,214 An analyst will need to use the EAA approach to evaluate projects with unequal lives when the projects are