Daisy Company is planning to purchase a new industrial tractor for its farming operations. As Chief Financial Officer (CFO) of the company, you are given two different proposals for the investment. The cost of capital for both proposals is 10%. Assume that Daisy will continue to replace worn-out tractors with similar ones. These mutually exclusive projects have the following estimated net cash flows.

Year	Tractor A ($)	Tractor B ($)
0	-40,000	-35,000
1	-2,000	-3,500
2	-2,000	-3,500
3	-2,000	-3,500
4	-2,000	-3,500
5	-2,000	-3,500
6		-3,500
7		-3,500

Which tractor should you purchase?

a.

Tractor A.

b.

Tractor B.

c.

There is not enough information to answer this question.

d.

Either Tractor A or Tractor B would be fine; i.e., You should be indifferent to the two tractors.