Equivalent annual annuity of most profitable project

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Reference no: EM132045566

Konyvkiado Inc. is considering two mutually exclusive projects. Both require an initial investment of $15,000 at t = 0. Project S has an expected life of 2 years with after-tax cash inflows of $7,000 and $12,000 at the end of Years 1 and 2, respectively. In addition, Project S can be repeated at the end of Year 2 with no changes in its cash flows. Project L has an expected life of 4 years and a cash-flow of $5200/year. Each project has a WACC of 9%. What is the equivalent annual annuity of the most profitable project?

Reference no: EM132045566

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