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NEW QUESTION: 1
Project A has an IRR of 12% and project B has an IRR of 9%. The crossover rate for these projects is
6.9%. You use the NPV rule for making project selections. If both the projects have a cost of capital of
10.4% and the projects are independent with normal cash flows, you should:
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D. insufficient information.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
Note that the crossover rate is unimportant here since the projects are independent, not mutually exclusive. Hence, you should select all projects with positive NPV. In this case, since A has an IRR greater than the cost of capital and it has normal cash flows, it has a positive NPV. Project B's IRR exceeds the cost of capital and hence has negative NPV. Therefore, you should select A and reject B.
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NEW QUESTION: 3
A. Option A
B. Option C
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Reference:http://java.boot.by/ibm-377/ch01s06.html(See the Flexible management 2ndParagraph 5thLine, and 3rdParagraph).
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