Question

Gore Global is considering the two mutually exclusive projects below. The cash flows from the projects...

Gore Global is considering the two mutually exclusive projects below. The cash flows from the projects are summarized below.

Year

ManBearPig Project Cash Flow

Flying Car Cash Flow

0

-$100,000   

-$200,000   

1

25,000

50,000

2

25,000

50,000

3

50,000

80,000

4

50,000

100,000


The two projects have the same risk. At what cost of capital would the two projects have the same net present value (NPV)?

A.

10.03%
B.

-24.45%
C.

2.86%
D.

13.04%
E.

15.90%
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