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danny2012 danny2012
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A year ago
Projects A and B have identical expected lives and identical initial cash outflows (costs). However, most of one project’s cash flows come in the early years, while most of the other project’s cash flows occur in the later years. The two NPV profiles are given below:

​

​

Which of the following statements is correct?



▸

More of Project A’s cash flows occur in the earlier years.



▸

More of Project B’s cash flows occur in the earlier years.



▸

We must have information on the cost of capital in order to determine which project has the larger early cash flows.



▸

The crossover rate, i.e., the rate at which Project A and B have the same NPV, is greater than Project A’s IRR, but less than Project B’s IRR.

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
Authors:
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otis24otis24
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A year ago
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danny2012 Author
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A year ago
Good timing, thanks!
Ctownsend
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Yesterday
I appreciate what you did here, answered it right Smiling Face with Open Mouth
loki1345
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2 hours ago
This helped my grade so much Perfect
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