Project S requires an initial outlay at t = 0 of $16,000, and its expected cash flows would be $4,500 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $26,000, and its expected cash flows would be $14,650 per year for 5 years. If both projects have a WACC of 12%, which project would you recommend?

Select the correct answer.

a. Neither Project S nor L, because each project's NPV < 0.

b. Project L, because the NPVL > NPVS.

c. Both Projects S and L, because both projects have IRR's > 0.

d. Both Projects S and L, because both projects have NPV's > 0.

e. Project S, because the NPVS > NPVL.