Consider Two Projects, X and Y

question 96

Multiple Choice

Consider two projects, X and Y. 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 cost of capital 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 greater than 10%.
• B) if the cost of capital is 8%, project x will have the higher npv.
• C) if the cost of capital is 18%, project y will have the higher npv.
• D) project x is larger in the sense that it has the higher initial cost.
• E) the crossover rate must be less than 10%.

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