In Comparing Two Projects Using an NPV Profile, at the Point

question 297

Multiple Choice

In comparing two projects using an NPV profile, at the point where the net present value of the projects involved are equal, ______________________.

• A) The IRR of each is equal to zero.
• B) The IRR of each is equal to the cost of capital.
• C) The discount rate that equates them is called the crossover rate.
• D) The projects both have NPVs equal to zero.
• E) The AAR exceeds the cost of capital.

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Definitions:

Highly Aware

The state of being exceptionally conscious or cognizant of one's surroundings, information, or changes.

Attentive

The quality of being alert and paying close attention to details, showing consideration for the needs and feelings of others.

Present

Pertaining to the current time or moment; being in the place under consideration.

Future

The time or period that comes after the present, which has yet to occur and is unknown or uncertain.