Two mutually exclusive investment opportunities require an initial investment of $5 million. Investment A then generate $1.5 million per year in perpetuity, while investment B pays $1 million in the first year, with cash flows increasing by 3% per year after that. At what cost of Capital would an investor regard both opportunities as being equivalent?

A. 3%

B. 6%

C. 9%

D. 10%

CathFoods will release a new range of candies which contain antioxidants. New equipment to manufacture the candy will cost $2 million, which will be depreciated by straight-line depreciation over 5 years. In addition, there will be $5 million spent on promoting the new candy line. It is expected the new line of candies will bring in revenues of $4 million per year for five years with production and support costs of $1.5 million per year. If CathFoods marginal tax rate is 35%, what are the incremental free cash flows in the second year of this project?

A. $1.765 million

B. $2.015 million

C. $2.415 million

D. $2.500 million

CathFoods will release a new range of candies which contain antioxidants. New equipment to manufacture the candy will cost $2 million, which will be depreciated by straight-line depreciation over 5 years. In addition, there will be $5 million spent on promoting the new candy line. It is expected the new line of candies will bring in revenues of $4 million per year for five years with production and support costs of $1.5 million per year. If CathFoods marginal tax rate is 35%, what are the incremental earnings in the second year of this project?

A. $1.365 million

B. $1.500 million

C. $1.753 million

D. $2.100 million