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Bagel Pantry Inc. is considering two mutually exclusive projects with widely differing lives. The company's cost of capital is 12%. The project cash flows are
Bagel Pantry Inc. is considering two mutually exclusive projects with widely differing lives. The company's cost of capital is 12%. The project cash flows are summarized as follows:
Project A Project B
C0 ($25,000) ($23,000)
C1 $14,742 $ 6,641
C2 $14,742 $ 6,641
C3 $14,742 $ 6,641
C4 $ 6,641
C5 $ 6,641
C6 $ 6,641
C7 $ 6,641
C8 $ 6,641
C9 $ 6,641
QUESTION TO ANSWER
Compare the projects by using the replacement chain approach and compare the projects by using the EAA method.
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