Suppose the Canadian Space Agency has two independent Martian rover projects: Spirit and Endeavour.Project Spirit has an IRR of 10% and project Endeavour has an IRR of 15%.The crossover rate is 9%.The project's appropriate discount rate is 12%.

Question

Quizplus · Accepted Answer

The appropriate discount rate for the projects is 12%, and both Spirit and Endeavour have IRRs higher than the discount rate. However, the crossover rate is 9%, which means that if the projects are evaluated based on their NPV (net present value), Endeavour would be the better choice. Therefore, the best choice is to only accept project Endeavour.

Suppose the Canadian Space Agency Has Two Independent Martian Rover