Projects C and W are mutually exclusive, and they have the following net cash flows:
|
Year
|
Project C
|
Project W
|
|
----
|
---------
|
---------
|
|
0
|
($50,000)
|
($100,000)
|
|
1
|
30,000
|
40,000
|
|
2
|
40,000
|
40,000
|
|
3
|
50,000
|
40,000
|
|
4
|
0
|
40,000
|
|
5
|
0
|
40,000
|
You are to use the equivalent annual annuity method for comparing these projects since they have unequal lives. The cost of capital is 10%. Which project should be chosen?