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QUESTION

Emily Worth, a financial manager, has been evaluating two mutually exclusive projects.

Emily Worth, a financial manager, has been evaluating two mutually exclusive projects. As the projects are repeatable and have different lives, she has decided to compare them using the equivalent annual annuity (EAA) approach. She has already calculated the net present values (NPV) of the 2 projects. Project A has an NPV of $35,000 and a life of 7 years. Project B has an NPV of $50,000 and a life of 13 years. The appropriate cost of capital for Emily's company is 15%. The EAA for Project A is ______ and the EAA for Project B is ______:

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