Scopelli Manufacturing Company (SMC) is considering two mutually exclusive projects. The expected life of project L is six years and that of project K is three years. SMC is planning to repeat project K for another three years. The expected cash inflows and outflows are provided as follows:

Project K		Project L
Year	Cash Flow	Year	Cash Flow
0	($25,000)	0	($30,000)
1	20,000	1	25,000
2	20,000	2	25,000
3	20,000	3	25,000
		4	25,000
		5	25,000
		6	25,000

SMC uses a weighted average cost of capital of 12% for both projects.

Which project do you advise the SMC to pick using NPV, without adjustment for their life difference?

To adjust for their life difference, you use the replacement chain and Equivalent Annual Annuity (EAA). Which project do you advise the SMC to pick now? You must explain how you get the solutions, step by step, in writing in 6 lines.