Project X's IRR Is 19% and Project Y's IRR Is

question 79

Multiple Choice

Project X's IRR is 19% and Project Y's IRR is 17%.The projects have the same risk and the same lives,and each has constant cash flows during each year of their lives.If the WACC is 10%,Project Y has a higher NPV than X.Given this information,which of the following statements is CORRECT?

• A) The crossover rate must be less than 10%.
• B) The crossover rate must be greater than 10%.
• C) If the WACC is 8%,Project X will have the higher NPV.
• D) If the WACC is 18%,Project Y will have the higher NPV.
• E) Project X is larger in the sense that it has the higher initial cost.

---

Definitions:

Market Structures

The organizational and other characteristics of a market that significantly affect the degree of competition and pricing within the market.

Cross-Functional Teams

Groups comprised of members from different departments or areas of expertise working together towards a common goal.

Divisional Focus

A strategic organizational approach that emphasizes the autonomy and specialization of divisions within a larger corporation.

Hybrid Structure

An organizational framework that combines elements of both functional and divisional structures, allowing for flexibility and more focused specialization.