Wilson Co.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 $8,500 at the end of Years 1 and 2,respectively.In addition,Project X can be repeated at the end of Year 2 with no changes in its cash flows.Project Y has an expected life of 4 years with after-tax cash inflows of $4,600 at the end of each of the next 4 years.Each project has a WACC of 11%.What is the equivalent annual annuity of the most profitable project?
A)$1,345.50
B)$1,346.30
C)$1,361.52
D)$1,376.74
E)$1,411.15

Question

​Wilson Co.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 $8,500 at the end of Years 1 and 2,respectively.In addition,Project X can be repeated at the end of Year 2 with no changes in its cash flows.Project Y has an expected life of 4 years with after-tax cash inflows of $4,600 at the end of each of the next 4 years.Each project has a WACC of 11%.What is the equivalent annual annuity of the most profitable project? ​
A)​$1,345.50
B)​$1,346.30
C)​$1,361.52
D)​$1,376.74
E)​$1,411.15

Quizplus · Accepted Answer

The Answer of ​Wilson Co.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 $8,500 at the end of Years 1 and 2,respectively.In addition,Project X can be repeated at the end of Year 2 with no changes in its cash flows.Project Y has an expected life of 4 years with after-tax cash inflows of $4,600 at the end of each of the next 4 years.Each project has a WACC of 11%.What is the equivalent annual annuity of the most profitable project? ​
A)​$1,345.50
B)​$1,346.30
C)​$1,361.52
D)​$1,376.74
E)​$1,411.15

​Wilson Co

Wilson Co