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.

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Definitions:

Sherman Act

A foundational antitrust law in the United States that prohibits monopolistic practices and promotes competition.

Clayton Act

A U.S. antitrust law, enacted in 1914, aimed at promoting competition and preventing monopolies.

Consumer Protection Act

A legal provision designed to protect the rights of consumers from unfair trade practices, defective goods, and misleading advertisements.

Treble Damages

A legal provision allowing a court to triple the amount of damages to be awarded, typically used as a punishment in certain lawsuits.