• XYZ Corporation is evaluating two mutually exclusive projects, Project A and Project B, with the following cash flows:

  Project A:

  • Initial Investment: $500,000
  • Cash Flows: $150,000 per year for 5 years

• Project B:

  • Initial Investment: $700,000
  • Cash Flows: $180,000 per year for 4 years

• Calculate the equivalent annual annuity (EAA) for each project and recommend the better investment.