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7 . Unequal project lives Galaxy Corp. has to choose between two mutually exclusive projects. If it chooses project A , Galaxy Corp. will have
Unequal project lives Galaxy Corp. has to choose between two mutually exclusive projects. If it chooses project A Galaxy Corp. will have the opportunity to make a similar investment in three years. However, if it chooses project B it will not have the opportunity to make a second investment. The following table lists the cash flows for these projects. If the firm uses the replacement chain common life approach, what will be the difference between the net present value NPV of project A and project B assuming that both projects have a weighted average cost of capital of Cash Flow Project A Project B Year : $ Year : $ Year : Year : Year : Year : Year : Year : Year : Year : Year : $ $ $ $ $ Galaxy Corp. is considering a threeyear project that has a weighted average cost of capital of and a NPV of $ Galaxy Corp. can replicate this project indefinitely. What is the equivalent annual annuity EAA for this project? $ $ $ $ $
Unequal project lives
Galaxy Corp. has to choose between two mutually exclusive projects. If it chooses project A Galaxy Corp. will have the opportunity to make a similar investment in three years. However, if it chooses project B it will not have the opportunity to make a second investment. The following table lists the cash flows for these projects. If the firm uses the replacement chain common life approach, what will be the difference between the net present value NPV of project A and project B assuming that both projects have a weighted average cost of capital of
Cash Flow
Project A Project B
Year : $ Year : $
Year : Year :
Year : Year :
Year : Year :
Year :
Year :
Year :
$
$
$
$
$
Galaxy Corp. is considering a threeyear project that has a weighted average cost of capital of and a NPV of $ Galaxy Corp. can replicate this project indefinitely. What is the equivalent annual annuity EAA for this project?
$
$
$
$
$
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