Normal Projects C and D Are Mutually Exclusive

question 3

Multiple Choice

Normal projects C and D are mutually exclusive. Project C has a higher net present value if the WACC is less than 12 percent, whereas Project D has a higher net present value if the WACC exceeds 12 percent. Both projects have a positive NPV if the WACC is 12 percent. Which of the following statements is most correct?

• A) Project D has a higher internal rate of return.
• B) Project D is probably larger in scale than Project C.
• C) Project C probably has a faster payback.
• D) All of the statements above are correct.
• E) Answers a and c are correct.

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