Lancaster Corp

question 30

Multiple Choice

Lancaster Corp.is considering two equally risky,mutually exclusive projects,both of which have normal cash flows.Project A has an IRR of 11%,while Project B's IRR is 14%.When the WACC is 8%,the projects have the same NPV.Given this information,which of the following statements is CORRECT?

• A) If the WACC is 9%, Project A's NPV will be higher than Project B's.
• B) If the WACC is 6%, Project B's NPV will be higher than Project A's.
• C) If the WACC is greater than 14%, Project A's IRR will exceed Project B's.
• D) If the WACC is 9%, Project B's NPV will be higher than Project A's.
• E) If the WACC is 13%, Project A's NPV will be higher than Project B's.

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