Seattle Manufacturing is considering the purchase of one of three mutually exclusive projects for improving its assembly line. The firm plans to use a 14 percent cost of capital to evaluate these equal-risk projects. The initial outlay and annual cash flows over the life of each project are shown in the following table.

Project X		Project Y		Project Z
Initial Outlay (CF0)	R 156 000		R 104 000		R 132 000
Year (t)			Cash Inflows (CFt)
1	R 34 000		R 56 000		R 30 000
2	50 000		56 000		30 000
3	66 000		-		30 000
4	82 000		-		30 000
5	-		-		30 000
6	-		-		30 000
7	-		-		30 000
8	-		-		30 000

a. Calculate the NPV for each project over its life. Rank the projects in descending order based on NPV.[6]

b. Use the equivalent annual cost (EAC) approach to evaluate and rank the projects in descending order based on the EAC. [6]

c. Compare and contrast your findings in parts (a) and (b). Which project would you recommend that the firm purchase? Why? [8]