Crockett Graphic Designs Inc. is considering two mutually exclusive

projects. Both projects require an initial after$-$tax investment of

$$11,000$ and are typical average$-$risk projects for the firm. Project $A$

has an expected life of $2$ years with after$-$tax cash inflows of $$7,000$

and $$10,000$ at the end of Years $1$ and $2,$ respectively. Project B has

an expected life of $4$ years with after$-$tax cash inflows of $$8,000$ at

the end of each of the next $4$ years. The firm's WACC is $12\%.$

a$.$ If the projects cannot be repeated, which project should be

selected if Crockett uses NPV as its criterion for project selection?

Project

should be selected.

b$.$ Assume that the projects can be repeated and that there are no

anticipated changes in the cash flows. Use the replacement chain

analysis to determine the NPV of the project selected. Do not

round intermediate calculations. Round your answer to the nearest

cent.

Since Project

$\text{'}$s extended NPV $=$$

should be selected over Project

with an NPV $=$$

$,$ it

c$.$ Make the same assumptions as in part $b.$ Using the equivalent

annual annuity $($EAA$)$ method, what is the EAA of the project

selected?

Project

should be selected.