Engineering, 05.06.2020 21:03 shelbie76

Giant Equipment Ltd. is considering two projects to invest next year. Both projects have the same start-up costs. Project A will produce annual cash flows of $42,000 at the beginning of each year for

eight years. Project B will produce cash flows of $48,000 at the end of each year for seven years. The

company requires a 12% return.

Required:

a) Which project should the company select and why? (5 marks)

b) Which project should the company select if the interest rate is 14% at the cash flows in Project B

is also at the beginning of each year? (5

Answers: 1

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Giant Equipment Ltd. is considering two projects to invest next year. Both projects have the same s...