Two Mutually Exclusive Investment Opportunities Require an Initial Investment of $8

Multiple Choice

Two mutually exclusive investment opportunities require an initial investment of $8 million.Investment A then generates $1 million per year in perpetuity,while investment B pays $500,000 in the first year,with cash flows increasing by 5% per year after that.Determine the NPV for which an investor would regard both opportunities as being equivalent.

A) -$1 million
B) $0
C) $1 million
D) $2 million
E) $8 million