Question
JJJ Bakery Inc. is considering two mutually exclusive projects with widely differing lives. The company's cost of capital is 12%. The project cash flows are
JJJ Bakery Inc. is considering two mutually exclusive projects with widely differing lives. The company's cost of capital is 12%. The project cash flows are summarized as follows: Project A Project B C0 ($25,000) ($23,000) C1 $14,742 $ 6,641 C2 $14,742 $ 6,641 C3 $14,742 $ 6,641 C4 $ 6,641 C5 $ 6,641 C6 $ 6,641 C7 $ 6,641 C8 $ 6,641 C9 $ 6,641 a. Compare the projects by using Payback. b. Compare the projects by using NPV. c. Compare the projects by using IRR. d. Compare the projects by using the replacement chain approach. e. Compare the projects by using the EAA method. f. Chose a project and justify your choice. SOLUTION:
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