Given the following cash flows for two mutually exclusive projects, and a required rate of return of 12%, which of the following statements is true? Year Project A O 1 2 3 4 5 6 -580,000 290,000 290,000 150,000 150,000 Project B -580,000 130,000 130,000 230,000 230,000 230,000 115,000 Group of answer choices Project B should be accepted because it has the highest EAA. Project B should be accepted because it has the highest NPV. Both projects should be accepted because both have a positive NPV (and EAA). Project A should be accepted because it has the highest EAA. Project A should be accepted because it has the highest NPV.

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- Main View | Course X * CengageNOWV2| Online teachin X University of Sioux Falls, South D x - genow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator%3D&inpro... eBook Average Rate of Return-Cost Savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $90,000 with a $8,000 residual value and a ten-year life. The equipment will replace one employee who has an average wage of $15,980 per year. In addition, the equipment will have operating and energy costs of $4,350 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent. IC

Question 2 Suppose Cyberdyne Systems creates a Professional version of its machine learning software. By disabling some of the features in the Professional version it can create a Home version. Both versions have zero marginal cost. Cyberdyne Systems faces two customer segments each interested in buying at most one version. The RPs of each segments for each version are displayed below. Professional Version Home Version Segment Size Business Home Buyers $100 $20 $ 0 $5 20 80 Each customer will choose the software that gives her the highest surplus. 1. If Cyberdyne Systems offers only the Professional version, what price should it charge in order to maximize revenue? 2. If it offers both versions, what prices should it set to maximize revenue. 3. Now suppose that instead of valuing the Home version at $0, each Business buyer values the Home version at $80. Keep all other RPs the same as before. Show that at the prices you chose in (2), Business buyers would actually prefer to buy the…