The unlimited a national retailing chain is considering an investment in one of two mutually exclusive projects. The discount rate used for Project A is 12 percent. Further, Project A costs 15, 000 and it would be depreciated using MCARs. It is expected to have an after tax salvage value of 5, 000 at the end of 6 years and to produce after tax cash flows including depreciation of 4000 for each of the 6 years. Project b costs 14815 and would also be depreciated using the MACRS. B is expected to have a zero salvage value at the end of its 6 years life and to produce after tax ash flows including depreciation of 5100 each year for 6 years. The unlimited marginal tax rate is 40 percent. What risk adjusted discount rate will equate the NPV of Project B to that of Project A

15

18

20

12

16