II. Tucca Global is facing their new capital budgeting year with 2 mutually exclusive projects, S and L. The companys required rate of return is ten percent.

The following are the projected cashflows for S: -$100,000 in year 0, $59,000 in year 1, 59,000 in year 2. Project cashflows for project L are estimates to be: (-$100,000), $33,500, $33,500, $33,500, $33,500, in years 0,1,2,3, and 4, respectively.

1. What is the NPV of project S? What is the NPV of project L?

2. Which project should you choose and why? Use the replacement chain approach and show all calculations in detail

3. What if you chose to use the Equivalent Annual Annuity approach instead? Show how you would do that with all calculations.