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18. You use the equivalent annual cash flow technique to select between two options satisfying the same need but having different timelines. This technique can
18. You use the equivalent annual cash flow technique to select between two options satisfying the same need but having different timelines. This technique can also be used even if the timelines are the same. Consider the following two projects, of which only one can be selected: Project A: Immediate investment of $225,000, profits in years four to six of $160,000. Project B: Immediate investment of $112,500, profits in years one to three of $55,000 followed by profits of $20,000 in years four to six. a. At a cost of capital of 12%, calculate the NPV for both projects and make your recommendation. b. Calculate the equivalent annual cash flow for both projects and make your recommendation. c. Comment on the findings
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