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Faleye Consulting is deciding which of two computer systems to purchase. It can purchase state-of-the-art equipment (System A) for $19,000, which will generate cash flows of $8,000 at the end of each of the next 6 years. Alternatively, the company can spend $14,000 for equipment that can be used for 3 years and will generate cash flows of $8,000 at the end of each year (System B). If the companys WACC is 10% and both projects can be repeated indefinitely, which system should be chosen, and what is its EAA? Do not round intermediate calculations. Round your answer to the nearest cent.

Choose Project ______ , whose EAA = $________

Haleys Crockett Designs Inc. is considering two mutually exclusive projects. Both projects require an initial investment of $11,000 and are typical average-risk projects for the firm. Project A has an expected life of 2 years with after-tax cash inflows of $7,000 and $9,000 at the end of Years 1 and 2, respectively. Project B has an expected life of 4 years with after-tax cash inflows of $5,000 at the end of each of the next 4 years. The firms WACC is 14%.

1. If the projects cannot be repeated, which project should be selected if Haley uses NPV as its criterion for project selection?

   Project _______ should be selected.

2. Assume that the projects can be repeated and that there are no anticipated changes in the cash flows. Use the replacement chain analysis to determine the NPV of the project selected. Do not round intermediate calculations. Round your answer to the nearest cent.

   Since Project _______'s extended NPV = $ _______ , it should be selected over Project _______with an NPV = $_____.

3. Make the same assumptions as in part b. Using the equivalent annual annuity (EAA) method, what is the EAA of the project selected?

   Project ______ should be selected.

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