The Chief Financial Officer of an electricity company called MG06 is considering two investment projects. Both projects consist in buying new land and building a new power plant. For the first project, the cost of the initial investment (t=0) is $200,000 and this investment will generate a cash flow one year later (t=1) equal to $22,000. This cash flow is expected to increase at a constant growth rate of 4% after the first year. investment project has an initial cost of $130,000 and will generate a cash flow one year later equal to $15,000. This cash flow is expected to increase at a constant growth rate of also 4% after the first year. The cost of capital of these two projects is 14% and it is expected that the cash flows will grow at a constant rate of 4%. If there are no other restrictions or frictions, which project should the CFO choose?

a) Project 1

b) Project 2

c) Either of the two projects since they have the same value.

d) It cannot be determined