Your manager is choosing between two mutually exclusive projects. Complete the analysis below to help with this decision. The project information is as follows:

ProjectA ProjectB

Annual Revenues 985,000 725,000

Annual Operating Costs 360,000 400,000

Initial Investment 1,800,000 800,000

Salvage Value - -

Project Life 5 5

The cost of capital for your company is 8 percent.

Complete Steps 1-4 below and determine which project should be accepted.

Calculate the Payback Period for each Project: Compute the ARR for each Project: