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Problem:

A company is considering two mutually exclusive projects. Both require an initial investment of $10,000 at t = 0. Project X has an expected life of 2 years with after-tax cash inflows of $6,000 and $7,900 at the end of Years 1 and 2, respectively. Project Y has an expected life of 4 years with after-tax cash inflows of $4,300 at the end of each of the next 4 years. Each project has a cost of capital 8%.

Please answer the following questions:

Question 1: Find the EAA for project X.

Question 2: Find the EAA for project Y.

Describe in detail and describe all workings out.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146115

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