Using a 10% discount rate, a firm must choose between two projects which are mutually exclusive and repeatable. Project J costs $100,000 and earns $50,000 each year for five years. Project K costs $200,000 and earns $150,000 in the first year and then $75,000 for each of the next three years. Using the equivalent annual annuity approach, which project would you choose?

a.

Project J

b.

Project K

c.

Both since the equivalent annual annuity for each is positive

d.

Cannot be determined