Projects C and D are mutually exclusive and have normal cash flows.
Project C has a higher NPV if the WACC is less than 12%, whereas Project D has a higher NPV if the WACC exceeds 12%. Which of the following statements is CORRECT?
A) Project D probably has a higher IRR.
B) Project D is probably larger in scale than Project C.
C) Project C probably has a faster payback.
D) Project C probably has a higher IRR.
E) The crossover rate between the two projects is below 12%.

Question

Quizplus · Accepted Answer

Project D having a higher NPV at WACC above 12% suggests it has a higher IRR, as IRR is the discount rate at which NPV equals zero.

Projects C and D Are Mutually Exclusive and Have Normal