You are given the choice between two mutually exclusive projects: Project A: $ 21,000...

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Accounting

You are given the choice between two mutually exclusive projects:
Project A: $ 21,000 initial investment
$ 6,500 a year NCF for 6 years
Project B: $ 25,000 initial investment
$ 5,500 a year in NCF for 9 years
If the cost of capital is 5.6%, which project should you select if you will need this capacity for the
indefinite future. Explain the basis for your decision. A number alone is not sufficient.
Since these two projects have different lives, you need to make the decision based on their equivalent
annual annuity(EAA).
Here are the answers:
NPV of A = $11368.28
NPV of B = $13069.30
Please explain how to solve for the EAA below using a BAii Plus Financial calculator. SHOW ALL STEPS. (the numbers below are the correct answers)
EAA of A = $2282.91
EAA of B = $1888.17

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