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Author Question: Projects A and B are mutually exclusive and have normal cash flows. Project A has an IRR of 17% and ... (Read 86 times)

mt05945

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on: Aug 7, 2023
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?

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


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


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


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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%.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by mt05945 on Aug 7, 2023

romyclv

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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mt05945

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Reply 2 on: Aug 7, 2023
Excellent

olderstudent

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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