You Are Using a Net Present Value Profile to Compare

question 15

Multiple Choice

You are using a net present value profile to compare investments A and B, which are mutually exclusive. Which one of the following statements correctly applies to the crossover point between these two?

• A) The internal rate of return for project A equals that of project B, but generally does not equal zero.
• B) The internal rate of return of each project is equal to zero.
• C) The net present value of each project is equal to zero.
• D) The net present value of project A equals that of project B, but generally does not equal zero.
• E) The net present value of each project is equal to the respective project's initial cost.

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