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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 $8 million. Under Plan A,

An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t=0 of $8 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t+1 of $12.8 million. Under Plan B, cash flows would be $2 million per year for 12 years. Estimate the crossover rate of the NPVs for Plans A and B. If the firms WACC is 12% what is the NPV of the project you would recommend?

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