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What is the equivalent annual annuity

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Reference no: EM131756644

Project A has the following cash flows:
Year CF
0 -40,000
1 8,000
2 14,000
3 13,000
4 12,000
5 11,000
6 10,000

Project B has the following cash flows:
Year CF
0 -20,000
1 7,000
2 13,000
3 12,000
Assuming that the required rate is 12%, what is the Equivalent Annual Annuity (EAA) for the two projects? Based on the EAA, which project is better?

Reference no: EM131756644

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