I’m just confused. Please kindly let me know the concept.
When it comes to EAA approach, it has the annual annuities from each project’s NPV
The higher EAA would be better.
But simply comparison to annual annuity is lack of timing value.
For exampe, A: NPV=3,245, 6years, interst rate=12% and B: NPV=2,577, 3years, interst rate=12%
The annuity for A is 789 and 1,073 for B.
A has only annuity of 789, which is less than 1,074 for B. But A is scheduled to receive the anuity 6 times and B for 3 times. Would just the bigger EAA be better?