Fleming Enterprises is thinking about building a new manufacturing facility in either California or Nevada. Both facilities require the same initial investment and are expected to generate the same intangible benefits and annual net cash flows, but the estimated net present value (NPV) for the California facility is tens of thousands of dollars lower than that for the Nevada facility. What is the most likely reason for this difference in NPV?

a. Fleming is using a lower discount rate when calculating the NPV of the California facility because it believes that construction of this facility involves a greater degree of risk.

b. Fleming is using a higher discount rate when calculating the NPV of the California facility because it believes that construction of this facility involves a greater degree of risk.

c. Fleming is using a lower discount rate when calculating the NPV of the California facility because it believes that construction of this facility involves a lower degree of risk.

d. Fleming is using a higher discount rate when calculating the NPV of the California facility because it believes that construction of this facility involves a lower degree of risk.