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River Rocks, Inc., is considering a project with the following projected free cash flows: 0 1 2 3 4 Year Cash Flow (in millions) $50.2

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River Rocks, Inc., is considering a project with the following projected free cash flows: 0 1 2 3 4 Year Cash Flow (in millions) $50.2 $10.1 $20.3 $20.5 $14.8 The firm believes that, given the risk of this project, the WACC method is the appropriate approach to valuing the project. River Rocks' WACC is 12.5%. Should it take on this project? Why or why not? The timeline for the project's cash flows is: (Select the best choice below.) O A. Cash Flows (millions) - $50.2 - $10.1 - $14.8 - $20.3 + - $20.5 1 3 Year 0 1 2 4 OB. Cash Flows (millions) $50.2 $10.1 $20.3 $20.5 $14.8 Year 0 1 2 3 4 OC. Cash Flows (millions) $50.2 - $10.1 $20.3 $20.5 - $14.8 Year 0 1 2 3 4 OD. Cash Flows (millions) - $50.2 $10.1 $20.5 $14.8 $20.3 1 2 Vaar 2 A

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