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Determining the cash flows-giant equipment ltd

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Problem: Giant Equipment Ltd. is considering two projects to invest next year. Both projects have the same start-up costs. Project A will produce annual cash flows of $42,000 at the beginning of each year for eight years. Project B will produce cash flows of $48,000 at the end of each year for seven years. The company requires a 12% return.

Required:

a) Which project should the company select and why?

b) Which project should the company select if the interest rate is 14% at the cash flows in Project B is also at the beginning of each year?

Reference no: EM132500903

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