Wilson Co Is Considering Two Mutually Exclusive Projects

question 19

Multiple Choice

Wilson Co. is considering two mutually exclusive projects. Both require an initial investment of $10,000, and their risks are average for the firm. Project X has an expected life of 2 years with after-tax cash inflows of $6,000 and $8,785 at the end of Years 1 and 2, respectively. Project Y has an expected life of 4 years with after-tax cash inflows of $4,750 at the end of each of the next 4 years. The firm's WACC is 11%. Determine the equivalent annual annuity of the most profitable project.

• A) $1,112.99
• B) $1,236.66
• C) $1,374.06
• D) $1,526.74
• E) $1,679.41

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