Haley Graphic Designs

Question 5 Haley's Graphic Designs Inc is considening two mutually exclusive projects Both projects requre an ntal nvestment of R10,000 and are typical average-risk projects for the company Projact A has an expected lHe of 2 years with after-tax cash inflows of R6,000 and R8,000 at the end of Years 1 and 2, respectvely Project B has an expected life of 4 years with after-tax cash infiows of R4,000 at the end of each of the next 4 years The company's WACC is 10% Required. 51 If the projects cannot be repeated, which project should be selected t Haley uses NPV as ns 118 Marks! cntenon for project selection? 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 selected project 52 (5) 53 Make the same assumptions as in part 5 2 Using the equivalent annual annuty (EAA) method, what is the EAA of the selected project