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ABC Airlines s considering the purchase of two alternative planes. Plane A has an expected life of 5 years, will cost $100 million, and will
ABC Airlines s considering the purchase of two alternative planes. Plane A has an expected life of 5 years, will cost $100 million, and will produce cash inflows of $30 million per year. Plan B has a life of 10 years, will cost $132 million, and will produce cash inflows of $25 million per year. ABC plans to serve the route for only 10 years. The company's cost of capital is 13%. What is the equivalent annual annuity (EAA) for project (plane) A?
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