Question: Spectrum energy is considering two projects: Project A is to develop new oil wells off the gulf coast. Project B is to develop a solar

Spectrum energy is considering two projects: Project A is to develop new oil wells off the gulf coast. Project B is to develop a solar energy farm in the desert close to Las Vegas. Project A has an initial cost of $6M and will produce cash flows of $758,728 at the end of each semiannual period for 14 years. Project B has an initial cost of $7M and will produce cash flows of $772,374 at the end of each semiannual period for the next 14 years. Each project will begin producing cash flows in one semiannual period from today.

Which project should spectrum choose if their cost of capital is 18%? Report the NPV of the project that you would recommend to Spectrum if they can only pursue one. If you do not believe that either project should be pursued then enter zero for your answer.

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