7-4 Santa Clara Corporation is consolidating investments T and U. Initial Costs and year-end cash flows follow. Investment T has a life of 3 years and investment U has a life of 4 years. The limiting resource that caused the two investments to be mutually exclusive cannot be reused. The required return is 10 percent. Which investment should be chosen? Why?

Year 0 1 2 3 4

T -50,000 25000 25000 25000

U -65000 25000 25000 25000 25000

7-5 For the mutually exclusive investments described in problem 4, which investment should be chosen if the constraining resource can be reused at the end of either investments life? Why?