Last year, Global Industries and Worldwide Industries both decided to purchase a new piece of manufacturing equipment. At that time, both firms spent the same amount on the equipment, and both expected the equipment to yield the same net annual cash flows. Both firms also determined the NPV of their equipment purchase was $97,000. Now, many months later, each firm performs a post-audit of its choice to purchase the equipment. In doing so, Global now calculates an NPV of $104,000 for its machine, while Worldwide calculates an NPV of $102,700 for its machine. What is the most likely explanation for these post-audit findings?

• A
• :
• Both firms underestimated their discount rate for the project, although Global did so by a greater amount.
• B
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• Both firms underestimated their discount rate for the project, although Worldwide did so by a greater amount.
• C
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• Both firms overestimated their discount rate for the project, although Global did so by a greater amount.
• D
• :
• Both firms overestimated their discount rate for the project, although Worldwide did so by a greater amount.