Onsidering two mutually exclusive investments

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Reference no: EM13925510

The Smith Pie Company is considering two mutually exclusive investments that would increase its capacity to make strawberry tarts. The firm uses a 12 percent cost of capital to evaluate potential investments. The two projects have the following costs and cash flows streams: Alternative A Year 0 $-30,000 1 $10,500 2 $10,500 3 $10,500 4 $10,500 Alternative B Year 0 $-30,000 1 $6,500 2 $6,500 3 $6,500 4 $6,500 5 $6,500 6 $6,500 7 $6,500 8 $6,500. Use the annual equivalent annual annuity method to solve.

Reference no: EM13925510

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