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ssi15 ssi15
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8 months ago
Projects A and B are mutually exclusive and have normal cash flows. Project A has an IRR of 17% and Project B’s IRR is 22%. The company’s WACC is 14%, and at that rate Project A has the higher NPV. Which of the following statements is correct?


▸

The crossover rate for the two projects must be greater than 14%.



▸

Assuming the timing pattern of the two projects’ cash flows is the same, Project A probably has a lower cost (and larger scale).



▸

Assuming the two projects have the same scale, Project A probably has a faster payback than Project B.



▸

Since A has the lower IRR, then it must also have the lower NPV if the crossover rate is less than the WACC of 14%.

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
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nancy123nancy123
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8 months ago
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ssi15 Author
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8 months ago
Just got PERFECT on my quiz
tcat
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Yesterday
Correct Slight Smile TY
hmonier
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2 hours ago
I appreciate what you did here, answered it right Smiling Face with Open Mouth
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