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show every stop specially how to solve equivalent cash flow Of both airplane and weather machine 7) RainMan Inc. is in the business of producing

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show every stop specially how to solve equivalent cash flow Of both airplane and weather machine

7) RainMan Inc. is in the business of producing rain upon request. They must decide between two investment projects: a new airplane for seeding rain clouds or a new weather control machine built by Dr. Nutzbaum. The discount rate for the new airplane is 9 percent, while the discount rate for the weather machine is 39 percent (it happens to have higher market risk). Which investment should the company select and why? (Assume a 0 percent inflation rate and that projected costs do not change over time.) Weather Machine Year Airplane 0 900 900 500 550 1 600 600 3 685 A) Weather machine, because it has a higher equivalent annual cash flow B) Weather machine, because it has a higher NPV C) Airplane, because it has a higher NPV D) Airplane, because it has a higher equivalent annual cash flow

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