When evaluating two mutually exclusive projects with a crossover rate of 6% and IRR _A

Question

When evaluating two mutually exclusive projects with a crossover rate of 6% and IRR _A < IRR _B , we prefer Project A when the discount rate is:

Quizplus · Accepted Answer

When the discount rate is less than the crossover rate, the project with the lower IRR (in this case, Project A, as indicated by "< IRR") is preferred because it typically has smaller initial outlays or more consistent cash flows in the earlier years, making it more valuable at lower discount rates.

When Evaluating Two Mutually Exclusive Projects with a Crossover Rate