1B?

NPV Analysis for projeets with Unequal Lives Company C is considering two mutually exclusive projects with the same initial investment of $20,000 and projects would be repeated. The life span of Project L is 5 years, and the life span of Project S is 4 years. Assuming a 12% discount rate, which one should this firm choose? I. (Hint]: you may compare EAA information for given projects. Note: "mutually exclusive projects with unequal lives" a. Cash Flows Projeet L (20,000) 5,000 5,500 7,500 6,000 5,500 Year 0 Project S - (20,000) 6,250 4,,29 eS5D,34 3e51 S,ss0. 7,500 ,338.3S S,335.3s 7,000 7,250 3,83. NR 3 3,120.85 w07, 51 r-12% for both M/ 1,1a.llo d.c ose Psigt S 1,.lo al'! 00.s7 21,100,57 3605 3,037 EAA:311,02 = 36.32 Assume that Company C is considering two mutually exclusive projects A and B that would be repeated. The project is required by law to protect the environment and the firm has following two options. Assuming a 12% discount rate, which one should this firm choose? b. Cash Flows Year Project A Project B (20,000) (20,000) 5,000) (6,250) (5,500) (7,000) (7,500) (7,500) 6,000) (7,250) 5,500 4 12% for both