Question
Santa Clara Corporation is considering investments G and H. Initial costs and year-end cash flows follow. The limiting resource that caused the two investments to
Santa Clara Corporation is considering investments G and H. Initial costs and year-end cash flows follow. The limiting resource that caused the two investments to be mutually exclusive can be reused. The required return is 6.5 percent.
Year 0 1 2 3 4 5
G -150,000 45,000 45,000 45,000 80,000
H -95,000 35,000 25,000 55,000 45,000 60,000
Net present value for project G_____________ Equivalent annuity for project G_________
Net present value for project H__ __ Equivalent annuity for project H_________
Which investment should be chosen? _______________
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