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An oil - drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t = 0 of $

An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t =0 of $11 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t =1 of $13.2 million. Under Plan B, cash flows would be $1.9546 million per year for 20 years. The firm's WACC is 11.2%.

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