Toby's is considering two average risk Alternative ways of producing its patented polo shirts.

Process S has a cost of $8000 and we're produce a net cash flow of $5000 per year for 2 years.

Process L Will cost $11,500 and we produce a cash flow of $4000 per year for 4 years.

The company has a contract that requires it to produce the shirts for 4 years but the patent with expire after 4 years so the shirts will not be produced after 4 years. Inflation is expected to be zero during the next 4 years.

A) If cash inflows occur at the end of each year and if Toby's cost of capital is 10% by what amount will the better project increase Toby's value?

B)What is the equivalent annual annuity for each project?