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Consider Two Projects, Project P and Project Q, with the Following

Question 48

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Consider two projects, Project P and Project Q, with the following end of year cash flows:
Consider two projects, Project P and Project Q, with the following end of year cash flows:   Which of the following statements is correct? A)  The crossover discount rate is less than the internal rate of return of both projects. B)  If the cost of capital is 5 percent, the profitability index of both projects will be less than 1.0. C)  If these two projects are independent and the cost of capital is 6 percent, we should reject both projects. D)  If these two projects are mutually exclusive and the cost of capital is 5 percent, we should accept only Project P. Which of the following statements is correct?


A) The crossover discount rate is less than the internal rate of return of both projects.
B) If the cost of capital is 5 percent, the profitability index of both projects will be less than 1.0.
C) If these two projects are independent and the cost of capital is 6 percent, we should reject both projects.
D) If these two projects are mutually exclusive and the cost of capital is 5 percent, we should accept only Project P.

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