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A firm has a choice between two projects that are repeatable indefinitely (that is, when the project ends a new investment is made and the
A firm has a choice between two projects that are repeatable indefinitely (that is, when the project ends a new investment is made and the project is repeated again). The cost of capital for the firm is 5%. The first project has an initial outlay of $10,000 and generates cash flows per year of $3,000 for 5 years. The second project has an initial outlay of $13,000 and lasts for 3 years. What yearly cash flows are required for the second project to make the two projects equally attractive?
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