The opportunity cost of capital for Karina Limited is 6%. Which of the following mutually exclusive projects will maximise the value of the company assuming each project requires a $2.5 million initial investment?

Select one:

a. $50,000 of free cash flow starting year 1, then permanently increasing at 4% p.a.

b. $75,000 of free cash flow every year permanently

c. $100,000 of free cash flow starting year 1, then permanently decreasing at 2% p.a.

d. $200,000 of free cash flow each year from year 1 for 20 years.