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Haley graphic design is considering two alternative projects. Both projects have initial cash outlays of $10,000. Project A has an expected life of two years with after tax cash inflows of $6000 and 8000 at the end of 1 and 2 years respectively. Project B has an expected life of 4 years with after tax cash inflows of $4000 at the end of each of the next 4 years. The firms cost of capital is 10%. Using the replacement chain which project would you pick?

Part B: Apply the equivalent annuity approach to decide which project is better.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92172670

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