The Jasper Mountain Co. specializes in back-country camping facilities across the country. The Plan It Co. specializes in making travel reservations and promoting vacation travel. Jasper has an after-tax cost of capital of 12 % and Plan It has an after-tax cost of capital of 10 %. Both firms are considering building wilderness campgrounds complete with their own lakes and numerous mountain trails. The estimated net present value of such a project is estimated at $13,000 at a discount rate of 10 % and - $6,500 (negative) at a 12 % discount rate. Which firm or firms, if either, should accept this project?
A) Jasper only.
B) Plan It only.
C) Both Jasper and Plan It.
D) Neither Jasper nor Plan It.
E) Cannot be determined without further information.
Correct Answer:
Verified
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