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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,

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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, 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 firm's WACC is 15% what is the NPV of the project you would recommend? 14.23% : $3.13 million O 22.89% : $3.13 million O 14.23%; $2.84 million 22.89%; $2.84 million 18.26%: $3.52 million

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