Assume that a company is 30% debt and 70% equity financed. The company has a 12% cost of equity and 9.5% after-tax cost of debt. It considers undertaking a project which has a life of 8 years. If the cash flows of the project are, on the average, spread evenly over the life of the project, the optimal cutoff period is closest to:

Select one:

a. 5.1 years

b. 6.1 years

c. 4.2 years

d. 3.9 years