Which of the statements below is FALSE?
A)Project A has a higher y-axis intercept for its NPV profile than mutually exclusive Project B.As long as the profile of Project A is above the profile of Project B,Project A will have a higher NPV value for that particular discount rate.
B)Project A and Project B are mutually exclusive.The two projects intersect in terms of NPV at a discount rate labeled the crossover rate.
C)Project A has a higher y-axis intercept for its NPV profile than mutually exclusive Project B.As we proceed past the crossover rate to the right on the x-axis,Project B's profile will be above Project A's profile.
D)Project A has a higher y-axis intercept for its NPV profile than mutually exclusive Project B.This means that Project A has a lower NPV than Project B when the discount rate is zero.

Question

Quizplus · Accepted Answer

Statement D is false because a higher y-axis intercept for NPV profile means that the project has a higher NPV at zero discount rate. Therefore, Project A has a greater NPV than Project B at zero discount rate.

Which of the Statements Below Is FALSE