Question
Abrosz Inc. is considering two mutually exclusive projects. Both require an initial investment of $14,200 at t = 0. Project A has an expected life
Abrosz Inc. is considering two mutually exclusive projects. Both require an initial investment of $14,200 at t = 0. Project A has an expected life of 2 years with after-tax cash inflows of $7,400 and $13,600 at the end of Years 1 and 2, respectively. Project B has an expected life of 4 years with after-tax cash inflows of $6,000 at the end of each of the next 4 years. Each project has a WACC of 5%. What is the equivalent annual annuity of the most profitable project? Use Excel to calculate NPV. Follow example given at the top of the module, Show work!
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