Question
Wilson Co. is considering two mutually exclusive projects.Both require an initial investment of $10,750, and their risks are average for the firm.Project X has an
Wilson Co. is considering two mutually exclusive projects.Both require an initial investment of $10,750, and their risks are average for the firm.Project X has an expected life of 2 years with after-tax cash inflows of $6,000 and $8,785 at the end of Years 1 and 2, respectively.Project Y has an expected life of 4 years with after-tax cash inflows of $4,750 at the end of each of the next 4 years.The firm's WACC is 10.6%.Determine the equivalent annual annuity of the most profitable project.
a.
$1,419.70
b.
$1,630.03
c.
$1,156.79
d.
$1,314.54
e.
$1,130.50
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