Your firm has estimated the following cash flows for two mutually exclusive capital investment projects. The firm's required rate of return is 13%. Use this information for the next 3 questions.

Year Project A Cash Flow Project B Cash Flow 0 -$100,000 -$100,000 1 28,900 48,000 2 28,900 40,000 3 28,900 40,000 4 28,900 5 28,900

Which of the following statements best describes projects A and B?

a) Project A should be accepted because it has the highest NPV. b) Project A should be accepted because it has the highest EAA. c) Project B should be accepted because it has the highest EAA. d) Both projects should be accepted because they have positive NPVs and EAAs. e) Neither project is acceptable.