Exercises:

Project $x$ has $4$ years of life, project $Y$ has $5$ years of life. The initial investments and

cash flows from these two projects are shown in the table.

Assume that the cost of capital is $10\%,$ what are the NPVs of both projects? Based on

NPVs$,$ which project should be undertaken? What are the EAAs of both projects? Based

on EAAs, which project should be undertaken?