Omara bakery is considering the replacement of its old, fully depreciated machine. Two new projects are available: Project L, which has a cost of $400,000, a 3-year expected, and after-tax cash flows of $200,000 per year, and Project J, which has a cost of $350,000, a 6-year life, and after-tax cash flows of $120,000 per year. Assume that both projects can be repeated, and that machine prices are not expected to rise. Assume the companys WACC is 12%.

1. The NPV for Project L is *

a. $143,368.88

b. $200,000

c. -$200,000

d. -$143,368.88

e. None of the above

2. The Equivalent Annual Annuity for Project L is *

a. $80,366.25

b. $120,000

c. $200,000

d. $33,460.41

e. None of the above

3. The Equivalent Annual Annuity for Project J is *

a. 200,000

b. $34,871

c. $33406.41

d. $120,000

e. None of the above

4. which Project would you accept if they are mutually exclusive? *

a .Project L since EAAL > EAAJ.

b. Project J since EAAL < EAAJ.

c. Project J since EAAL >0.

d. Both projects since EAA of both projects is positive.

e. None of the above