Two Mutually Exclusive Investment Opportunities Require an Initial Investment of $5

Multiple Choice

Two mutually exclusive investment opportunities require an initial investment of $5 million.Investment A then generates $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%
E) 12%