2. If the CFO uses the EAA approach to decide which projects to undertake, he should choose the ______Project because it has the ______ EAA

Evaluating projects with unequal lives Your company is considering starting a new project in either Italy or Ukraine-these projects are mutually exclusive, so your boss has asked you to analyze the projects and then tell her which project will create more value for the company's shareholders. The Ukrainian project is only a three-year project; however, your The Italian project is a six-year project that is expected to produce the following cash flows: company plans to repeat the project after three years. The Ukrainian project is expected to produce the following cash flows: Project: Italian Project: Ukrainian Year 0 -$700,000 Year 0 Year 1: $240,000 -$530,000 Year 2: $270,000 Year 1: $280,000 Year 2: $290,000 Year 3: $290,000 Year 4 Year 3: $310,000 $250,000 Year 5 $130,000 Year 6: $110,000 Because the projects have unequal lives, you have decided to use the equivalent annual annuity approach to evaluate them. You have determined that the appropriate cost of capital for both projects is 10%. Calculate the NPV of both projects NPV Italian project: NPV Ukrainian project What is the equivalent annual annuity (EAA) for the Ukrainian project? O $46,382.17 O $42,165.61 $13,522.02 $51,020.39 What is the equivalent annual annuity (EAA) for the Italian project? Q $56,936.13 $37,060.55 $68,892.72 $62.629 75