Ryngaert Industries Uses the NPV Method to Establish Its Capital

question 188

Multiple Choice

Ryngaert Industries uses the NPV method to establish its capital budget, and it is now considering two mutually exclusive projects whose after-tax cash flows are shown below: If the required rate of return is below some rate, then Project L should be selected, whereas if the required rate of return is above that rate then Project S should be selected.What is the "crossover" rate at which the NPV profiles of these projects intersect?

• A) 5.21%
• B) 7.55%
• C) 11.88%
• D) 15.66%
• E) 18.14%

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