Project A has an internal rate of return of 18 percent, while Project B has an internal rate of return of 16 percent. However, if the company's cost of capital (WACC) is 12 percent, Project B has a higher net present value. Which of the following statements is most correct?
A) The crossover rate for the two projects is less than 12 percent.
B) Assuming the timing of the two projects is the same, Project A is probably of larger scale than Project B.
C) Assuming that the two projects have the same scale, Project A probably has a faster payback than Project B.
D) Answers a and b are correct.
E) Answers b and c are correct.

Question

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The Answer of Project A has an internal rate of return of 18 percent, while Project B has an internal rate of return of 16 percent. However, if the company's cost of capital (WACC) is 12 percent, Project B has a higher net present value. Which of the following statements is most correct?
A) The crossover rate for the two projects is less than 12 percent.
B) Assuming the timing of the two projects is the same, Project A is probably of larger scale than Project B.
C) Assuming that the two projects have the same scale, Project A probably has a faster payback than Project B.
D) Answers a and b are correct.
E) Answers b and c are correct.

Project a Has an Internal Rate of Return of 18