Business, 10.08.2021 03:20 etxchrissy

The following two mutually exclusive projects are being evaluated. The firm's required rate of return is 12%. Year Project A Cash Flow Project B Cash Flow
0 -$85,000 -$136,000
1 42,500 43,350
2 42,500 43,350
3 42,500 43,350
4 43,350
5 43,350

Which of the following statements best describes projects A and B?

a. Project B should be accepted because it has the highest EAA.
b. Project B should be accepted because it has the highest NPV.
c. Project A should be accepted because it has the highest EAA.
d. Neither project is acceptable.
e. Both projects should be accepted because they have positive NPVs and EAAs.

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