Given a text T, and several options, according to the question posed in the text T to choose the most appropriate option from the options as the answer, please directly output the most appropriate option, do not need to output the explanation.

Carlos Velasquez, CFA, is a financial analyst with Embelesado, S.A., a Spanish manufacturer of sailboats and sailing equipment. Velasquez is evaluating a proposal for Embelesado to build sailboats for a foreign competitor that lacks production capacity and sells in a different market. The sailboat project is perceived to have the same risk as Embelesado's other projects.The proposal covers a limited time horizon—three years—after which the competitor expects to be situated in a new, larger production facility. The limited time horizon appeals to Embelesado, which currently has excess capacity but expects to begin its own product expansion in slightly more than three years.Velasquez has collected much of the information necessary to evaluate this proposal in Exhibits 1 and 2.
| Exhibit l.Selected Data for Sailboat Proposal(Currency Amounts in@Milions) |
| Initial fixed capital outlay60Annual contracted revenues60Annual operating costs25Initial working capital outlay(recovered at end of the project)10Annual depreciation expense(both book and tax accounting)20Economic life off acl ty(years)3Salvage(book) value of fact ya tend of project0Expected market value off a clit ya tend of project5 |



| Exhibit 2.Selected Data for Em be les a do， S.A. |
| Book value of long-term debt/total assets | 28.6% |
| Book value of equity/total assets | 71.4% |
| Market value of long-term debt/market value of company | 23.1% |
| Market value of equity/market value of company | 76.9% |
| Coupon rate on existing long-term debt | 8.5% |
| Interest rate on new long-te mm debt | 8.0% |
| Cost of equity | 13.0% |
| Marginal tax rate | 35.0% |
| Maximum acceptable payback period | 2 years |


Velasquez recognizes that Embelesado is currently financed at its target capital structure and expects that the capital structure will be maintained if the sailboat project is undertaken. Embelesado's managers disagree, however, about the method that should be used to evaluate capital budgeting proposals.One of Embelesado's vice presidents asks Velasquez the following questions:Question 1Will projects that meet a corporation's payback criterion for acceptance necessarily have a positive net present value (NPV)?Question 2For mutually exclusive projects, will the NPV and internal rate of return (IRR) methods necessarily agree on project ranking?Question 3For the sailboat project, what will be the effects of using accelerated depreciation (for both book and tax accounting) instead of straight-line depreciation on a) the NPV and b) the total net cash flow in the terminal year?Question 4Assuming a 13 percent discount rate, what will be the increase in the sailboat project's NPV if the expected market value of the facility at end of project is €15 million rather than €5 million?
The IRR for the sailboat project is closest to:
Option A:18.5%.
Option B:19.7%.
Option C:20.3%.

Answer: C