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Question 11 Your firm is considering the adoption of two new projects. However, due to rationing...

Question 11 Your firm is considering the adoption of two new projects. However, due to rationing requirements, only one can be chosen. Your boss informs you that the decision will be made based on which project provides the best Equivalent Annual Annuity, as it is assumed that each project can be rolled over upon completion. Given the information provided below, calculate the EAA for both projects and identify which should be chosen. Both projects have a required return of 13%.
Project 1 Year 0 1 2 3 4 5
Cash Flow -19,500 3,000 $4,000 $7,000 $7,500 $8,000
Project 2 Year 0 1 2 3
Cash Flow -18,000 8,500 $10,000 $4,500
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